Saturday, January 10, 2015

Historical Annual Returns for the S&P 500 Index - Updated Through 2014

2014 was another solid year for most U.S. stock market indexes, particularly for indexes of large cap stocks, such as the S&P 500 Index.   The S&P 500 Index experienced a total return of about 13.69%.   The market was largely driven higher as a result of  improving economic conditions in the United States, the Federal Reserve's continued QE3 U.S. Dollar pumping, and a strengthening U.S. Dollar.

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 2014.  The annualized return for the S&P 500 Index (and its predecessor S&P 90 Index) between 1926 and 2014 was about 10.12%.  The 5-year annualized return through the end of 2014 was about 15.45%.  The 10-year annualized return through 2014 was about 7.67%, the highest 10-year annualized return since 2006.

According to the Wall Street Journal, as of January 9, 2014, the P/E ratio of the S&P 500 Index based on estimated earnings over the next 12 months is approximately 16.75. 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 reasonably valued relative to its historical average P/E ratio.

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


Unknown said...

This is amazing info. Is there any way of getting this in Excel as I would love to add YTD averages at the bottom?

Unknown said...

This is great information. Is there anyway of getting this in an excel format as it would invaluable to be able to add the average YTD at the bottom of each column.
Thank you!

Anonymous said...

Jim tells me "the returns in my charts are nominal returns - they do not account for inflation."

JimmyD said...

Yeah and in the early 30's there was DEFLATION that ran around -9% to -10%.