Ten Year Rolling Returns: Adjusted For Inflation & Reinvestment

Published February 9th, 2009 in Technical Analysis Tags: 10 year returns, bear market, bullish, dividend reinvestment, inflation, long term, market timing, value investor.

Late last year when things were looking down right rotten, I featured a chart of the rolling 10 year returns for the S&P 500 index going back to the early 1900’s: Why Long-Term Investors Should Buy

Since the data was for a simple calculation that excluded dividend reinvestment and the effects of inflation, it raised some questions by readers whether it could be trusted to provide any insight.

Wonder no more thanks to the New York Times. They recently showed that accounting for a reinvested index, adjusted for inflation/deflation, an investor for the past 10 years (including January) would have a return of -5.1%.

This is slightly worse than the previous record set in September 1974 (for -4.3%). The data shows that my hunch was right about reinvested dividends and inflation canceling each other out since the two charts look very similar. The chart they provide doesn’t go back as far as mine but you get the idea:

Source: Off the Charts: The Worst Decade Ever for the S&P