Sunday, August 31, 2014

Historical Returns for the Nasdaq-100 (1986-2013)

The Nasdaq-100 Index includes 100 of the largest domestic and international non-financial securities listed on the Nasdaq Stock Market based on market capitalization. It is a modified capitalization-weighted index. The weightings of companies in the index are based on their market capitalizations, with rules capping the influence of the largest components. As of August 29, 2014, the three largest components of the index are Apple (comprising about 13.55% of the index), Microsoft (comprises about 8.23% of the index), and Google (comprises about 4.23% of the index).

The Nasdaq-100 was initiated on January 31, 1985 and has since become one of the most widely-followed technology indexes during the dot.com bubble. The chart below (click on the chart for a larger view) illustrates historical annual returns for the Nasdaq-100 index between the calendar years 1986 and 2013.  The Nasdaq-100 Index does not account for dividend payouts, but the Nasdaq 100 Total Return Index, which was initiated on March 4, 1999, does account for dividends.  The chart below calculated based on returns for (a) the Nasdaq-100 Index from January 1, 1986 - March 3, 1999; and (b) the Nasdaq-100 Total Return Index from March 4, 1999 - December 31, 2013.

As shown below, the Nasdaq-100 soared 36.92% during 2013, its second-highest return of the past 10 calendar years.  The Nasdaq-100 rose about 212% during the calendar years between 2009 and 2013, an annualized return of an impressive 25.55%.  

I have previously stated that I believe that the Nasdaq-100 is in the beginning stages of a multi-year bull market run as investors reconsider the potential of high tech companies.  The Nasdaq-100 returned a total of about 2834.56% between 1986 and 2013, an annualized return of about 12.83%.  This greatly outperforms the total return of  about 1575.41%, or about 10.59% of the the S&P 500 Index during the same period of time. 


* I have posted updated returns for the Nasdaq-100 through 2014 in another post.

Friday, February 21, 2014

S&P 500 Dividends (1977-2013)

The chart shown below (click on the chart to see a larger image) annual dividend payouts for the S&P 500 Index between 1977 and 2013. As shown, the dividends paid by the S&P 500 Index component companies increased from $4.67 in 1977 to about $34.99 in 2013. This is a total increase of about 649% and an annualized increase of 5.75% in the dividend yield. This an impressive annualized increase considering that this time period includes several sharp bear markets such as those during (a) 1981-82; (b) 1990-91; (c) 2000-02; and (d) 2008-09.  During the last two bear markets, the S&P 500 Index lost more than 50% of its value. 

As shown, the annual dividend payout amounts increased very rapidly during the late 70s-early 80s likely as a result of inflationary pressures (during the 1970s) and strong economic growth (during the 1980s).  The annual % increase in dividends was also strong between 2003 and 2007, fueled both by strong corporate profits and the dividend tax cut that Congress passed in 2003.  Dividend payouts, however, plummeted over 21% in 2008 during the 2008 bear market and financial crisis and only recovered to hit a new all-time high in 2012.  The annual dividend payout of the S&P 500 Index increased by double digits during each of the past three years and was about 53.9% higher in 2013 than it was in 2010. 

I still anticipate further % increases in the dividend rate in the coming years. Investors were burned badly during the 2000-2002 and 2007-08 bear markets and currently appear to prefer dividend increases over share buybacks. However, the % increase may be smaller in future years, given the dividend tax increases that the Obama administration pushed through Congress in 2012.


***An updated version of this chart containing data from 1977-2014 may be found in this post.

Saturday, February 08, 2014

Historical Annual Returns for the S&P 500 Index - Updated Through 2013

2013 was a huge year for across the board for practically all equities with the notable exception of Emerging Markets.  The S&P 500 Index, one of the most widely-followed U.S. equity indexes, had a total return of about 32.39%, its largest calendar year return since 1997 and the 13th largest calendar year return of the 88 calendar year returns shown in the charts below.   The market was largely driven higher as a result of  slight improved economic growth as well as well as the Federal Reserve's continued QE3 U.S. Dollar pumping

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 2013.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2013 was about 10.08%.  The 5-year annualized return through the end of 2013 was about 17.94%, one of the best 5-year annualized returns shown on the charts below.  The 10-year annualized return through 2013 was about 7.40%, the highest 10-year annualized return since 2006.

According to the Wall Street Journal, as of February 7, 2014, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 15.10. 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 be slightly undervalued relative to its historical average P/E ratio.  As of February 7, 2014 the total return of the S&P 500 Index (including reinvested dividends) is about -2.59% as a result of recent stock market mini-correction.






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

Tuesday, January 21, 2014

Historical Returns for the MSCI Emerging Markets Index (1988-2013)

The Morgan Stanley Capital International (MSCI) Emerging Markets (EM) Index is the preeminent emerging markets equity index. I have previously discussed annual returns of the index during the 1989-2008, 1989-2009, 1988-2010, 1988-2011, and 1988-2012 time periods.

The chart below (click on the chart for a larger view) shows annual returns for the MSCI EM Index in terms of U.S. Dollars between 1988 and 2013. The returns shown below represent net dividend reinvested returns. The 2013 total return for the MSCI EM Index was -2.60%, lagging considerably behind most other major stock indexes

During the 26 years for which I have data (i.e., 1988-2013), the MSCI EM Index lost value during 11 calendar years and gained value in 15 other calendar years. The worst returns came during 2008 when the Index plummeted 53.33% during the financial crisis and the best annual gains came during 2009 when the Index soared 78.51%. As I have previously discussed, the best extended stretch of strong returns occurred between 2003 and 2007 during which the index gained an impressive 382.96%, an annualized gain of approximately 37.02%.

The annualized returns were 14.79% for the 5-year period, 11.17% for the 10-year period, 10.91% for the 15-year period, and 7.32% for the 20-year period ending in 2013. Annualized returns between 1988 and 2013 were about 11.94% and the Index had a total new return of 1,776% between 1988 and 2013. The performance of the MSCI EM Index between 1988 and 2013 greatly exceeds the 10.50% annualized return and 1,242% total return of the S&P 500 Index during the same time period.

Emerging Markets are typically critical portion of an investment portfolio of any stock market investor with a long-term investment strategy.  Investment advisers typically recommend limiting Emerging Markets to no more than 10-15% of an aggressive investor's portfolio.  Although Emerging Markets have lagged significantly behind other major indexes in recent years, I expect the trend to reverse at some point in the near future.


Monday, January 20, 2014

1980 - 2013 Stock Market Returns for Various Indices

I have posted charts showing annual stock market and bond market returns for various indices in recent years for the time periods from 1980-2006, 1980-2007, 1980-2008, 1980-2009, 1980-2010, 1980-2011, and 1980-2012.  Shown below is an updated chart including returns from 2013 as shown below (click on the image for a larger view).

The chart shown below illustrates total returns for small cap indices (Russell 2000, Russell 2000 Value, and Russell 2000 Growth), large cap indices (S&P 500, S&P/Citi 500 Value, and S&P/Citi 500 Growth), a broad-based foreign stock index (Morgan Stanley Capital International Index for the developed stock markets of Europe, Australasia, and the Far East ("MSCI EAFE index")), an index of bonds (Barclays Capital Aggregate Bond Index)*, and the Nasdaq Composite Index**.

2013 was a fantastic year for stock market indices across the board as central banks around the world continued a strategy of monetary easing to provide additional liquidity to the markets.  Small caps and tech led the way, with the Russell 2000 Growth Index rising 43.30%, the Nasdaq Composite rising 40.12%, the Russell 2000 rising 38.82%, and the Russell 200 Value index rising 34.52% .  Large caps also performed well, with the S&P 500 Index rising 32.39%  The bond market, on the other hand, posted its first annual decrease in value since 1999, dropping 2.02%. 

Value indices outperformed Growth indices during the past year - the Russell 2000 Value Index was the strongest equity performer of the indices shown below for the first time since 2004, returning about 18.05%. The next best performer was the S&P 500 Value Index, which returned about 17.68% in 2012. International equities continued to rebound from the tough environment resulting from the Euro-zone issues in 2011, with the MSCI EAFE Index gaining about 22.78%. 

As shown in the chart below, the Russell 2000 Value Index provided the strongest returns by far between 1980 and 2012, returning a total of 6578%, or an annualized return of about 13.15% per year. The total return of the Russell 2000 Value Index is more than 2,200% more relative to its initial value on December 31, 1979 than the next best index tracked below, the S&P 500 Index.


* The Barclays Capital Aggregate Bond Index was known as the Lehman Brothers Aggregate Bond Index prior to 2008.
** The Nasdaq Composite Index returns include annual price increases in the Index for 1980-2009 and total returns (accounting for reinvested distributions) for 2010-2013.  I have not been able to obtain total returns for the Nasdaq Composite for calendar years prior to 2010.

 *** Edit - January 2, 2017 ***
I have updated this chart with results through 2016.