Here's a follow-up on our previous comparison of total returns in today's bear market and the Crash of 1929. In real (inflation-adjusted) index price, the all-time market high occurred in 2000, not 2007. So we've modified our previous comparison by starting the current decline in August 2000 and overlaying an equivalent period from the Crash of 1929 into the Great Depression. We're using monthly averages of daily closes for data points, which is why we're starting the current secualr bear in August 2000 rather than March. Although the daily high did occur in March, the monthly average of daily closes peaked five months later.
This new chart offers a fascinating — and somewhat disturbing — comparison. Like the earlier chart this one shows both the index price (excluding dividends) and total return (with dividends).
Particularly noteworthy is this odd couple of dissonant facts:
Today's real decline of -53.6% is not as severe as the -60.9% decline over the equivalent time frame during the Great Depression.
The total return, including dividends, was vastly superior during the earlier period.
Why this anomaly? Since the beginning of the secular bull market that began in the early 1980s, dividend income has fallen by the wayside in the quest for capital appreciation. See my previous comments on this topic in A Short History of Stock Dividends.
Here's a follow-up on our previous comparison of total returns in today's bear market and the Crash of 1929. In real (inflation-adjusted) index price, the all-time market high occurred in 2000, not 2007. So we've modified our previous comparison by starting the current decline in August 2000 and overlaying an equivalent period from the Crash of 1929 into the Great Depression. We're using monthly averages of daily closes for data points, which is why we're starting the current secualr bear in August 2000 rather than March. Although the daily high did occur in March, the monthly average of daily closes peaked five months later.
