Stock Market Up 1651% Since 1980, More Than Half Dividends.

Stock Market Up 1651% Since 1980, More Than Half Dividends.

May 1, 2005

Stock Market Up 1651% Since 1980, More Than Half Dividends.
We spend so much time whining about what the market did yesterday that I thought it would be helpful to remind you about the longer-term numbers.

During the nearly 25 years (97 quarters) between January, 1980 and March this year, the S&P 500 index delivered a total return of 1651% (12.5% annually) to investors who re-invested dividends. Of that, just under half (46.6%) was in the form of capital gains; 53.4% was in re-invested dividends.

The S&P 500 Index (SPX) was 135.8 on 12/31/80, when Larry Kudlow, Jerry St. Dennis, and I were scrambling to put together President Reagan’s economic plan. It hit a low of 109.6 in June, 1982, when Dr. Doom and Mr. Gloom were whining about the twin deficits. It is 1158.5 today.

Many investors today bought their first stock in 1999 when you couldn’t lose money buying tech stocks. They are sitting in cash today earning 2% per year. (3% if you are willing to lock your money up for 6 months in CDs or T-bills).

Stocks are up 26.3% just in the past 2 years since the dividend tax cut. I remember doing a press conference with John Snow in March, 2003 when the S&P was 7500, saying the dividend tax cut would boost values by 10-20% and change corporate payout policies. Since then the market has added $3 trillion in value.

There is no better place for long-term investors than the stock market. That is as true today as it was in 1980.

JR

John Rutledge

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