Sunday, April 04, 2021 6:52:59 PM
Hi Tom
I periodically update a AIM of the S&P since 1871 as sourced from Robert Shiller's data http://www.econ.yale.edu/~shiller/data.htm
AIM monthly of the inflation adjusted price (rather than the more conventional nominal share price), no dividends or cash interest included (assumed both are spent) and as we're using inflation adjusted share price changes we also discount the AIM cash figure by inflation (cash deflated (more usually)), as that way better reflects the overall real (after inflation) total AIM portfolio gain (excluding cash interest and dividends).
Broadly that's provided a 2.2% annualised real portfolio gain, where historic 4.25% average cash interest/dividends might have been spent, so of the order of a 6.5% overall annualised real gain.
Recent indicated percentage cash is up at 55% levels, quite high by historic levels over the last century. Around as high as the mid 1960's that subsequently saw relatively poor rewards for investors, and approaching the highs of the dot com bubble peak and Roaring 20's peak (late 1920's).
Today's ceiling however can become tomorrows floor, but when a turn does occur they tend to be hard and fast. If stocks take a 33% haircut even cash earning nada sees its stock purchase power rise +50%.
BTW the charts/figures are all US$ based (US CPI etc.).
I periodically update a AIM of the S&P since 1871 as sourced from Robert Shiller's data http://www.econ.yale.edu/~shiller/data.htm
AIM monthly of the inflation adjusted price (rather than the more conventional nominal share price), no dividends or cash interest included (assumed both are spent) and as we're using inflation adjusted share price changes we also discount the AIM cash figure by inflation (cash deflated (more usually)), as that way better reflects the overall real (after inflation) total AIM portfolio gain (excluding cash interest and dividends).
Broadly that's provided a 2.2% annualised real portfolio gain, where historic 4.25% average cash interest/dividends might have been spent, so of the order of a 6.5% overall annualised real gain.
Recent indicated percentage cash is up at 55% levels, quite high by historic levels over the last century. Around as high as the mid 1960's that subsequently saw relatively poor rewards for investors, and approaching the highs of the dot com bubble peak and Roaring 20's peak (late 1920's).
Today's ceiling however can become tomorrows floor, but when a turn does occur they tend to be hard and fast. If stocks take a 33% haircut even cash earning nada sees its stock purchase power rise +50%.
BTW the charts/figures are all US$ based (US CPI etc.).
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