Stock Market Delivers Meager Gains to Investors

If you have wondered why your stock portfolio hasn't grown much in the last few years, here is one possible reason. On an inflation-adjusted (real) basis, from the close of 1997 through the close of 2007, the S&P 500, a broad measure of the 500 largest U.S. stocks, has delivered an annualized return of 1.61 percent. And as of the January 15, 2008 close, the annualized real return stands at only 0.98 percent.

No wonder investors are wringing their hands.

S&P 500 Returns 1997 - 2007
Date	S&P 500	S&P 500 - Inflation Adjusted	Annualized Return
1997	970.43	1,252.19	NA
1998	1,229.23	1,561.80	24.73%
1999	1,469.25	1,826.42	20.77%
2000	1,320.28	1,587.86	8.24%
2001	1,148.08	1,342.56	1.76%
2002	879.82	1,012.84	-4.15%
2003	1,111.92	1,251.51	0.0%
2004	1,211.92	1,328.69	0.85%
2005	1,248.29	1,323.71	0.70%
2006	1,418.30	1,456.99	1.70%
2007	1,468.36	1,468.38	1.61%

Computational Notes:

The yearly closes of the S&P 500 are from finance.yahoo.com. The Consumer Price Index (CPI) values used to compute the inflation-adjusted S&P 500 yearly closes are from the Bureau of Labor Statistics. The annualized return computations use the 1997 close as the base value.

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Posted January 15, 2008.