Eddy Elfenbein points out that the SPX is now positive for the millenium, since its close at 1471.48 on April 17, 2007.
That’s 0.15% higher than the December 31, 1999 close of 1469.25, for a 7-1/4 year gain of 0.15%. (The bad news is that inflation has increased by 22%; dividends have
added about 12.5%)
Here’s Eddy’s rundown of some major indexes since December 31, 1999:
S&P 600 Small-Cap Value…………129.84%
S&P 600 Small-Cap………………….115.01%
S&P 400 Mid-Cap Value……………109.02%
S&P 600 Small-Cap Growth……….98.15%
S&P 400 Mid-Cap………………………97.07%
S&P 400 Mid-Cap Growth…………..84.92%
Dow Utilities……………………………..82.35%
Dow Transports…………………………70.70%
Morgan Stanley Cyclical……………..68.33%
Russell 2000……………………………..64.23%
Morgan Stanley Consumer………….36.02%
S&P 500 Value………………………….29.95%
Dow………………………………………….11.10% (29.03% w/divs)
Russell 3000………………………………8.19%
Wilshire 5000…………………………….7.95% (20.49% w/divs)
Russell 1000………………………………4.60%
S&P 500…………………………………….0.15%
S&P 100………………………………….-15.04%
S&P 500 Growth………………………-23.75%
Nasdaq…………………………………….-38.15%
Nasdaq 100……………………………..-50.51%
Good stuff — thanks Eddy
Dow Transportation has like Tripple top. Feb 26, yesterday, and Today.
Any significance at all? Does it really matter now?
Some investment experts say if we recalculate the US stock market increases in Euros we would actually see a flat market. I don’t have the savvy to do that, but the erosion of the dollar is an important consideration when evaluating US market gains.
According to the Investment Company Institute, 41% of all ETF money is in large cap sectors and 7% of all ETF money is in small cap sectors! What that tells us is that investors are not taking full advantage of the opportunity to diversify by using ETFs and that performance may suffer as a result. It also suggests that lack of better diversification, with so much in large caps, may wind up actually hurting investors as it did in 2001-2003.
Here are some fascinating statistics that can help one asset allocate by style:
Small Cap Value returns from 1927-2004: 14.7%
Micro Cap returns from 1927-2004: 13.0%
Large Cap Value returns from 1927-2004 : 11.7%
Large Cap Growth returns from 1927-2004: 9.5%
This tell us that Large Cap Growth companies are too large and too mature. Next, the risk premiums, over the long term, to achieve a better rate of return, goes down when you invest in value funds within the Small Cap Sectors. Next, a portfolio of 60% S&P 500 index and 40% Lehman Bond index from 1973-2004 will return an annual return of 10.4%. If you change the mix to 30% S&P 500 index, 40% Short-term Bonds and 30% US Micro Cap the return goes up to 11.8% per year. Now, if you further diversify into 30% to International (small and large and emerging), and 30% into US (small value and large value and S&P 500) the return goes to 13.1% per year with less risk than the first two portfolios.
This breakdown shows the importance of diversification across stock types. The large-cap growth leaders of the 90s have given way to small-cap value leaders in the 2000s. In the 10s, the worm will doubtless turn again.
To piggy-back on Leslie’s point, the S&P buys less than half the gold that it did on 12/31/99.
Happy Market! Yay! Inflation is back in the market! The transfer from housing inflation is a success!
If we can keep the asset inflation going, we’re ok! Woot!
Why compare anything to Gold? Why not lead, or horse manure?
Or one could suppose that Gold is now “expensive”…how the heck to you “value” gold? If you stip out the conspiracy theorists and $$ doomsday spec buyers, the demand would look much more punk for “old yeller”.
What is the economic significance of December 31, 1999?
closing them on the highs, wow what a week. what a month for that matter!! this market is white hot! get long and enjoy it.
This millenium started on January 1, 2001, not 2000. The first millenium started in year AD 1, not Year 0. By the way, 1 BC immediately preceded AD 1, so Year 0 doesn’t technically exist.
http://en.wikipedia.org/wiki/Year_0#Historians
I would think the S&P 500 first turned positive for the millenium about a year ago (compared with the December 31, 2000 closing).
Well, regardless of when the millennium started, my question is still: Who cares what the return is this millennium? Why is that anymore useful than, say, the return over the last 1, 5, 10, 20 or 30 years?
Fred – why not indeed! Drop gold and substitute gas, corn, wheat, milk, cups of Starbucks coffee, plywood, Honda Civics, whatever. I think you’re missing the point. Also, there is something called the gold/oil ratio…
Fred–I realize that some believe that gold no longer serves a purpose in the context of a modern banking system, fractional reserves, and electronic transactions. However, it has been recognized for millenia as a store of value and a medium of exchange…one shouldn’t be so quick to assume that it is obsolete for those purposes, particularly in an environment that is tending towards increased inflation.
No conspiracy theories required. There’s no ignoring the fact that the dollar has been losing value against gold for the past several years. We can argue about what that means but it doesn’t add much value to the discussion to compare gold to lead and horse manure.
Of course we closed em on the highs today. Everybody knows the marts are always up on Merger Mania Monday. I’ll be taking my day trading profits about 2:30 pm.
Since 12/31/99:
S&P 500 vs. gold: down ~60%
S&P 500 vs. silver: down ~60%
S&P 500 vs. copper: down ~75%
S&P 500 vs. CRB index: down ~35%
S&P 500 vs. white bread: down ~20%
S&P 500 vs. eggs: down ~45%
S&P 500 vs. orange juice: down ~25%
S&P 500 vs. ground beef: down ~25%
S&P 500 vs. gasoline: down ~50%
Oops, forgot lead: down ~80%
Lest you think I’m cherrypicking, here are the results since the Jan 2003 bottom:
S&P 500 vs. gold: down 14%
S&P 500 vs. silver: down ~43%
S&P 500 vs. copper: down ~65%
S&P 500 vs. lead: down ~60%
S&P 500 vs. CRB index: up ~25%
S&P 500 vs. white bread: up ~55%
S&P 500 vs. eggs: up ~25%
S&P 500 vs. orange juice: up ~30%
S&P 500 vs. ground beef: up ~41%
S&P 500 vs. gasoline: up ~2%
Reports indicate that M-2 is up 9.1% year to date and 6.4% over the past year. M-3 is up over 10% year over year. And corporate profits are doing well, but excluding inflation…. do you think that…? Nah, no connection here. And Fannie and Freddie are going to buy up subprime mortgage paper as if they don’t have enough already. So where do we go from here? Do we continue the negative savings rate? Twenty years ago we were told that the markets controlled currencies and not the central banks because attempts by central banks would lead to increased money supplies and inflation, just basic Econ 101.
An interesting artilce at GoldSilver.com.
(lots of charts too, so the blog man might like it.)
Now I’m a biased gold freak, so one can take it with a grain of salt.
A sample:
“A 6.9% gain (the dow) over the entire 7-year period… hasn’t anyone heard of inflation? Don’t investors know that if their portfolio doesn’t outpace inflation they are actually losing ground?”
“The Dow is actually crashing, but if you have not yet educated yourself on the insidious ravages that inflation can have on your portfolio, you can’t see it. This is a blind spot investors must be mindful of, and guard against, if they are to prosper.”
http://goldsilver.com/the_dow_is_crashing.php