Here are two overlays — one with the nominal price, excluding dividends, and the other with the price adjusted for inflation based on the Consumer Price Index for Urban Consumers (which is usually just referred to as the CPI).
The charts require little explanation. So far the 21st Century has not been especially kind to equity investors. Yes, markets do bounce back, but often in time frames that defy optimistic expectations.
Performance of the SPY ETF
The charts above are based on price only. But what about dividends? Would the inclusion of dividends make a significant difference? Let’s take a look at the return on $1,000 invested in the SPY ETF at its March 2000 peak.
The total return certainly looks better 18 years later, but the real (inflation-adjusted) purchasing power of that $1,000 is currently only 802 dollars above break-even, a real compounded annual return of 3.24%.
The Invesco QQQ (QQQ) rose $1.07 (+0.59%) in premarket trading Monday. Year-to-date, QQQ has gained 16.46%, versus a 8.20% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Advisor Perspectives.