How sad is this? The diligent investor who started investing into the SPY in 2006 is now staring at a loss or break-even at best. There are some scarier charts such as the DVY and the PEY. Both of these ETFS were bandied about by the CNBC stock pumpers for the last 24 months as the safe plays that everyone should get into to protect them from market downside. Now the PEY and the DVY are both experiencing their year 2001. I will actually invest into the PEY and DVY in the future, that is, when they have lost a bit more of their value. I say probably by the end of this year or middle of next year might be a great buying opportunity for these ETFs. As for right now, LOOK OUT BELOW!!!
It's actually more dramatic. The "diligent investor" who started investing in the SPY in 1999 is now also looking at a loss or break-even at best.
Does that include automatic dividend reinvestment? That is a major portion of an SnP return that goes un discussed
If an investor were truly diligent, then they would have made yearly purchases during times of market downside and they might have fared better. Of course there are dividends and hopefully those taxable dividends help them cushion the blows. However, the regular investor usually just buys when the market appears to be strong and tunes into CNBC to blindly get their investment advice. The majority of financial advisors, professionals, were probably telling the public to go into an ETF like the SPY or a dividend ETF like the ones mentioned previously. Now these investors will get whip-sawed and disappointed because they could have simply gone to Vegas with the money invested and had more of a chance then they do currently. Oh well, maybe they might invest it into housing and prop that market up a bit. Who knows, maybe the bottom is in for housing...
What assumptions are you making regarding the timing of purchases, straight dca at static intervals? I believe an actual "diligent investor" would of been an aggressive purchaser at the low 02-03 valuations puttting their returns far ahead of the overall benchmark.
Again, price chart does not included income from dividends. The SPY paid $16.37 in total dividends PER SHARE from 3/19/99 til now. That adds to the bottom line for real. Just something to think about when you do these comparisions.
Inflation ate away at most of the dividends. Kudlow did a show about this, how real returns (minus dividends) were actually showing the S&P 500 as down 23% at its October peak relative to the same peak in 2000. Adding in dividends doesn't help much... "When dividends and inflation are factored into returns, the S&P 500 has risen an average of just 1.3% a year over the past 10 years, well below the historical norm, according to Morningstar Inc." http://online.wsj.com/article/SB120649226977964203.html
You must have brain damage or something. Not only do you have no idea what you're talking about but you're delusional that somehow because you made $50 off some SPY puts you know how to invest.
Yes, I stand corrected. Nevertheless, even when dividends are taken into account, one would still be looking at the negative SPY return for the last 8 years.