S&P 500 Compounded Annual Growth Rates

The following chart shows the compounded annual growth rates of or investments in the S&P 500 for the past 14 years.

The S&P 500 closed at 459 at the end of 1994. Buying at the end of 1994 and holding through the recent turmoil would yield a CAGR of 5%, 14 years later. Not too bad.

Consider however, buying anytime after 1994. Buying at the end of 1995 would have just kept your principal intact after adjusting for inflation. Buying in any subsequent year would have eroded your principal.

I believe that we are getting close to a very safe, very comfortable buying opportunity for long term investors.

Tish'a B'Av and the Stock Market

Tish'a B'Av falls on Saturdays, Sundays, Tuesdays and Thursdays.

Calculating stock market returns for the past 40 years on that day, the same $1 invested every year at the close of the evening prior and pulled out at the end of the day on the 9th of Av, would have turned into $.93656 at the end of 40 years.

The average Tuesday return has been .034% and the average Thursday return has been .025% (including Tish'a B'Av) for the past 45 years. (courtesy of http://techfarm.blogspot.com), while the average Tish'a B'Av return has been -.269% over the past 40.

I dont know what the St Dev has been, nor do I know if Tuesday/ Thursday returns have been different over the past 40 years than the past years. So this is just meant to be fun and a drop interesting and not significant.

Maybe we are lucky that the ninth of Av falls on an open stock market day only 6 out of every 10 years.

Fun with Charts: Stock Market 1929 - 1942 vs. 2000 - 2013

Not the first, Im sure, to compare the two, but interesting parallels.

Initial fall from the peak.

• The S&P, or whatever Bloomberg includes in the S&P from 1929 (possibly the entire market back then) peaked at close to $32 on September 16 1929. The market then fell for 33 months to $4.40, a drop of ~86%.

• QQQQ, the largest 100 companies on the NASDAQ, peaked at about 117 on March 27 2000. The market then fell for 31 months to $20.06, a drop of ~83%.

2. Long Recovery to next peak

• It took 57 months for the S&P to reach its next peak, in March 1937, for a gain of 324%
• It took 60 months for the QQQQ to reach its next peak, in October 2007, for a gain of 173%

3. Fall

• From the next peak of 18.67 in March of 1937, the market fell 54% in 12 months and bottomed on March 31 1938 at 8.5

• From our peak (QQQQ) in October 2007, we have fallen 41% in 12 months