Saturday, March 02, 2013

Historical Annual Returns for the S&P 500 Index - Updated Through 2012

2012 was a good rebound year for practically all U.S. equity indexes, including the S&P 500 Index, which had a total return of about 16.0%.   The market was driven higher as a result of somewhat improved economic growth as well as currency devaluation caused by the Federal Reserve pumping money into the U.S. economy. 

Standard & Poor's introduced its first stock market index in 1923 and created the S&P 500 Index in 1957.  The charts below (click on individual charts for a larger view) show annual total returns for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2012.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2012 was about 9.84%.  The 5-year annualized return through the end of 2012 was about 1.66%, one of the worst 5-year annualized returns shown on the charts below, although it is an improvement over the -0.25% 5-year annualized return through 2011.  The 10-year annualized return through 2012 was about 7.10%, a major improvement over the weak 2.92% returns recorded in the 10-year period ending in 2011.

According to the Wall Street Journal, as of March 1, 2013, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 13.68. As I have previously discussed, the average P/E ratio of the S&P 500 Index and other large caps stocks has 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 2013 if the economy continued to strengthen. As of March 1, 2013 the S&P 500 Index (including reinvested dividends) is up about 6.86% 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.


Imperator6 said...

Thank you so much for this valuable data. It certainly helps me in my investing decisions...particularly in weighing dollar cost averaging into low cost index funds versus value investing into individual stocks.

Anonymous said...

Will you be updating with 2013 data?

Anonymous said...

32.39% for 2013