How Is Your Portfolio Doing? How About When you Account For Inflation?
Adjusted for inflation, the recent gains in the stock market are puny. A subject that I have discussed many months ago.
E.S. Browning of the WSJ did the numbers and has come up with the following…
Many investors realize that stocks have been among the worst investments of the past decade. But they may not realize quite how bad the decade was, because most people forget about the effects of inflation.
Despite its 2009 rebound, the Dow Jones Industrial Average today stands at just 10520.10, no higher than in 1999. And that is without counting consumer-price inflation. In 1999 dollars, the Dow is only at about 8200 and would have to rise another 28% or so to return to 1999 levels. Using today’s dollars and starting at 10520.10, the Dow would have to surpass 13460 to get back to its 1999 level in real, inflation-adjusted terms.
Controlling for inflation takes extra work and makes stock gains look punier, so it is easy to see why stock analysts almost never do it. The media almost never do it either.[...]
[...]Because analysts almost never do the same [adjust for inflation] with stocks, it leaves investors with an exaggerated view of their portfolios’ performance over time.[...]
The entire article can be found on the WSJ site HERE
The only problem is: if we don’t play along with the insanity, we will even be further behind.
Safe alternatives (i.e. cash or near cash investments) also lose their values with all these reckless tactics perpetrated by both wall street and our government.
Hard times to be a value investor…………..
richard
Well this is something that I am sure we all can agree on Chuck. Another dagger to burst the balloon of the buy and hold crowd. I hope everyone had a safe and happy holiday season. Let’s continue to have spirited but cordial debate so that we may all become better and more profitable traders in the new year.
Chuck should take his wife out to a nice dinner and explain why he shorted her money at SPY $98, when clearly the yield curve(the Fed) and the trend,(any S&P500 chart), showed how wrong he is to try and pick market tops and bottoms.
He went short AAPL, as he “grabed the stick” at $118 and says he is hedged. I, for one, do not beleive he has the net worth to “hedge.” He needs to use stops, although his huge ego won’t admit it!!!
TBTF, how nice to see you again (sarcasm). You just don’t give up
AAPL was closed ages ago, what on Earth makes you believe that I still hold that to this very day? As a matter of fact I am taking my wife to dinner tomorrow night on nice gains from UUP. I would love to know who you ‘really’ represent. Is that you over on the slope giving him grief also…