Friday, January 08, 2016

Historical Annual Returns for the S&P 500 Index - Updated Through 2015

2015 was a mediocre year for the U.S. stock market indexes as a strong U.S. Dollar hurt earnings of multi-nationals.  The entire market also wavered under the prospects of a Federal Reserve interest rate hike and China's devaluation of its currency in August.   The total return of the S&P 500 Index was just 1.38%. 

As I have previously mentioned, 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 2015.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2015 was about 10.02%.  The 5-year annualized return through the end of 2015 was about 12.57%.  The 10-year annualized return through 2015 was about 7.30%.

According to the Wall Street Journal, as of January 8, 2015, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 15.75. 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 appears to be slightly undervalued relative to its historical average P/E ratio.





3 comments:

Anonymous said...

Thanks for the quick update this year, Jim! Looks like dividends kept us in the black for 2015.

Jeff Roberts said...

Wow! Outstanding work Jim. This is really neat data to study. Thanks for all of your hard work! I understand that the S&P 500 returns include dividends and they include the S&P 90 until 1957. What is your source for the annual returns each year?

Thanks again!! - Jeff

Jeff Roberts said...

Wow! Outstanding work Jim. This is really neat data to study. Thanks for all of your hard work! I understand that the S&P 500 returns include dividends and they include the S&P 90 until 1957. What is your source for the annual returns each year?

Thanks again!! - Jeff