|stock market returns project
||[Jan. 26th, 2011|10:33 am]
Riffing off of this New York Times chart I mentioned a few weeks ago, I present: a chart of stock market returns! A few notes:
- Unfortunately, I didn't have any S&P 500 data before 1950, so that's when the chart begins. I'm not sure how the original chart went back to 1920, and I didn't feel comfortable just copying their raw data.
- The calculations for dollar-cost averaging are...a little confusing. Basically I considered it as if you had a lump sum but instead of investing it all at once, you invest it a little bit per month. Except then correcting for inflation gets very tricky. Anyway, there may be some problems but I think the message is the same - especially in the short run it reduces risk and return, but the more strongly the market trends off the better off you would have been investing it all at once.
- It was fun to throw this together but it also adds less information over the original than I had hoped. Oh well!