Friday, January 25, 2013

Stocks Have Been Performing Well Lately

This article today is meant to look at fairly long-term price movements.  In the past YEAR, stocks (using the S&P 500) have way outperformed gold (the S&P 500 was up about 14% in 2012 (and some more in January 2013) vs. gold was about break-even for 2012).

Picking a time-frame matters when comparing investment returns!  Today, I just wish to show that stocks LATELY (since January 2012) have been performing better than gold.

***

I have focused my blog very much over the years on gold and alternative investments, but it is important to note that stocks (both the S&P 500 and Dow Jones Industrial indices) have both reached five-years highs.  Both of these indices have approximately doubled since the stock market lows of March 2009 (the lows during the market panic of 2008 - 2009).

The S&P 500 is an index made by Standard & Poors, it is composed of 500 "large companies".  More information on the S&P Index can be found here: http://en.wikipedia.org/wiki/S%26P_500

Here is a chart from Google Finance / Yahoo Finance / MSN Money of the S&P 500 over the past five years (the large numbers at the top of the chart show the S&P 500's gain today as of 3:21 PM):


S&P 500
S&P Indices: .INX - Jan 25 3:21pm ET
1501.25+6.43‎ (0.43%‎)

1d
5d
1m
6m
1y
5y
max
Open
High
Low
1494.82
1503.26
1494.82
Volume
Avg Vol
Mkt Cap
325,609,945
N/A
N/A
Now note that even with the gains since 2009 that the S&P 500 has performed POORLY since 2000 (note that the S&P moved up a little more by 3:29 PM today):

S&P 500
S&P Indices: .INX - Jan 25 3:29pm ET
1502.06+7.24‎ (0.48%‎)

1d
5d
1m
6m
1y
5y
max
Open
High
Low
1494.82
1503.26
1494.82
Volume
Avg Vol
Mkt Cap
325,609,945
N/A
N/A

Roughly speaking, the S&P 500 has gone nowhere since the year 2000.  This performance does NOT include inflation (of course), so anyone who held a substantial amount of money in the S&P 500 has done very poorly for 12 years!

***

Taking a longer view of gold, here is a chart of the price of gold over the last 10 years, compare THIS chart with the movement of the S&P 500 from 2000 - 2013 in the chart just above:



Source: www.kitco.com

And compare this chart of gold over the past five years (note that since the stock market low in March 2009 that the S&P 500 and gold have both approximately doubled, compare the below chart with the first chart of this article):




***

So, looking at different periods matters!  Lately stocks have been on a tear vs. gold!  Let's summarize, all numbers approximate:

S&P 500
Gold
1 Year Change
14%
0%
5 Year Change
100%
82%
10 Year Change
66%
450%


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