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A Quick Look at the 2008 Performance of Some of the Major Indices
By JLP | October 10, 2008
Below is the 2008 performance for the NASDAQ Composite, Russell 2000, S&P/Citigroup 500 Growth Index, S&P MidCap 400 Index, Dow Jones US Total Market Index, Russell 1000, S&P 500 Index, S&P/Citigroup 500 Value Index, S&P SmallCap 600 Index, and the Dow Jones Industrial Average.
All I can say is, “Wow!”
Topics: Investing |
October 10th, 2008 at 12:08 pm
An interesting thing to note here, as I read in another article…
Losses require reciprocal gains to get back to even. For instance, a stock that you buy at $100 loses 10%, so is now valued at $90. In order to get back to even, it requires a $10 increase, but note that $10/$90 = 11.11%. Similarly, if a stock drops 25%, it requires a 33% gain. And a 40% drop requires a stunning 66% gain. One can make various arguments about percentages versus raw numbers, but in any case, it’s still not a pretty picture…
October 11th, 2008 at 2:57 am
where is your assumed 8% annualized return?
those willingly brain washed by the financial industry now face the real probability of being a lifetime burger-flipper:)
October 14th, 2008 at 7:02 pm
Wilson
That’s not really a fair comment. The 8% annualised return is over a long investment horizon. We’re looking at a one (very bad) year period which falls under the ‘why stocks are risky’ basket. Imagine you start investing now and look at the returns over the next 5-10 years. Or, alternatively, look at investing post soon after the ‘87 crash and calculate your annualised return for the next few years.
More importantly, using indices as benchmarks is fraught with problems; they do not account for dividends (unless you use acculation indices) and there are very interesting subtleties related to their construction and re-balancing which messes with return calculations.
In fact, JLP, this may be something interesting to look at for a future post!
Gerard
October 14th, 2008 at 7:02 pm
Amendment, 8% seems a bit high even for a nominal return. I would say 6-7% nominal