Saturday, May 28, 2011

Historical Annual Returns for the S&P 500 Index - Updated Through 2010

2010 was an above-average year for the S&P 500 Index as the stock market continued its rebound from the depths of the 2008-200 market crash. The S&P 500 Index rose about 15.06% in 2010.

The annualized return for the S&P 500 Index (and its precursor S&P 90 Index) between 1926 and 2010 was 9.87% and the 5-year annualized return through the end of 2010 was 2.29%, an improvement over the 0.42% return over the 5-year period that ended in 2009. The 10-year annualized return through 2010 was a paltry 1.41%, a small improvement over the pathetic -0.95% recorded in the 10-year period ending in 2009.

According to the Wall Street Journal, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 13.52. The average P/E ratio of the S&P 500 Index and other large caps stocks has supposedly been around 16 based on data dating back to the 1800s, so the S&P 500 Index may have some room to grow again in 2011. As of May 27th, 2011 the S&P 500 Index (including reinvested dividends) is up about 6.69% so far this year.

I have posted an updated chart for the returns of the S&P 500 Index during the period between 1926-2015.

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