Comments on: Discouraging News about SP 500

By: Intelligent Speculator | Financial Ramblings!!

Intelligent Speculator | Financial Ramblings!! — Sun, 02 Aug 2009 15:41:48 +0000

[...] interesting graph published by TFB comparing the return of the S&P500 to cash deposits..! -Zach looks into the [...]

By: Dorian Wales

Dorian Wales — Sat, 01 Aug 2009 10:37:18 +0000

Another worring look into the lost decade of the US stock markets through one simple chart. An important lesson to all of us. Maybe the better 15 years are about to start…

By: Mockingbird

Mockingbird — Sat, 01 Aug 2009 06:12:06 +0000

Pretty much correct for the S&P numbers
Thanks for the interesting graph.

“.. they serve the one who puts them together…”
Agree

By: Ms Save Money

Ms Save Money — Fri, 31 Jul 2009 21:48:03 +0000

I agree – stats are made to serve the person who put them together – but hey – I like your comparison.

Anyway – bottom line is neither the stock market nor cd accounts are better than the other, it all depends on the market at that given time.
Say what if tomorrow stocks soar it would be way better than a cd account.

By: jj

jj — Fri, 31 Jul 2009 19:35:19 +0000

great chart

It means that S&P index is undervalued, given the risk with stock market compare to COD. Definitely means it’s oversold!

By: Chris

Chris — Fri, 31 Jul 2009 18:24:13 +0000

Does this only show the value of the S&P 500 at the end of 2008, it looks like it does? If so, then wouldn’t it be slightly higher now? The S&P 500 closed 2008 at 903.25. As of this moment it’s trading at 989.58. Assuming the person investing in the S&P 500 didn’t withdraw anything from the market his holdings would still be below the certificate of deposit investor – but he’d be gaining fast…

I still think that over the super long run (20+ years) and almost always over the regular long run the stock market will beat anything else. As much as people like to say what happened in 2008/2009 was unprecedented, it really wasn’t. The crash was the result of a bubble (people say the housing bubble, but I like to call it the debt/greed bubble – which is what it really was) bursting. It’s happened before – look at the dot.com bust – and it will happen again. This one was just really bad because it impacted so many businesses, but the overall idea of a bubble bursting and causing the stock market to decline is nothing new! Plus, it’s pretty obvious now that people overreacted (shocking!) during the crash causing the entire market to become undervalued, which is why we’re seeing such huge gains since March. Granted, there’s a good chance that we are overreacting again and overvaluing the market… but such is the nature of the human animal.

By: aerosmith

aerosmith — Fri, 31 Jul 2009 17:14:53 +0000

How come this is discouraging? I see the dip lasting only for about a year or so. But afterwards the market’s value look good.

By: The Financial Blogger

The Financial Blogger — Fri, 31 Jul 2009 15:35:09 +0000

Hey Frog,
good news and bad news:

Good news: you had a good question

Bad news: it does include dividends (it’s written on the graph)… no way out for the S&P 500 this time

By: Frog of Finance

Frog of Finance — Fri, 31 Jul 2009 14:16:32 +0000

Does the graph include the reinvestment of dividends for the S&P 500?

By: Tom

Tom — Fri, 31 Jul 2009 13:50:17 +0000

I have to say I find this post less than compelling. A cursory glance at the graph would suggest that COD is only higher than the S&P for 2 of the 15 months (or 13% of time). The rest of the time the S&P was much higher. For a completely undiversified portfolio I would actually say this is pretty impressive. If you factor in an increasing bond allocation as you reach retirement age you would clearly be ahead with the S&P.