2011 was a volatile and below above-average year for the S&P 500 Index. The U.S. stock market struggled in large part as a result of the continuing turmoil within Europe. The S&P 500 Index rose a mere 2.11% in 2011.
The annualized return for the S&P 500
Index (and its precursor S&P 90 Index) between 1926 and 2011 was about
9.77%. The 5-year annualized return through the end of 2011 was about -0.25%, one of the worst 5-year annualized return shown on the charts below. The 10-year annualized return through 2010 was about 2.92%, a slight improvement over the weak 1.41% return recorded in the
10-year period ending in 2010.
According to the
Wall Street Journal, as of June 29, 2012, the P/E ratio of the S&P 500 Index based on
estimated earnings over the next 12 months is approximately 12.95. As I have previously discussed, 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 2012.
As of June 29th, 2012 the S&P 500 Index (including reinvested
dividends) is up about 9.49% so far this year.
I have posted an updated chart for the returns of the S&P 500 Index during the period between 1926-2012.