THE SILVER LINING OF EQUITIES

March 17, 2023

In spite of the negativity we see regarding the markets, there are a few positives to remember.

The cash dividend of the S and P 500 soared nearly 11% to a new record high in 2022!

Here are a few more interesting statistics:

Just in the lifetime of a person reaching average retirement age of 62 – who were born in 1961, the following questions are interesting to ponder:

1: Where did the S and P 500 end the year just past, relative to where it was in 1961?

2: Critically important to the client on the cusp of retirement: How much did the index pay in dividends last year versus 1961?

3: How did both the price performance and the trend of dividend payments stack up in relation to inflation- which, in a two person three decade retirement, will be what matters most?

The answers:

  • The S&P500 closed out 1961 at 72. It ended 2022 at 3.839. (Up over 53 times [+53x])
  • The Cash dividend in 1961 was $2.04. It was nearly $67 this past year. (Up over 32 times [+32x])
  • The consumer price index ended 1961 at 30. It closed out 2022 at 297. (CPI- inflation rate up over 10 times [+10x])

The bottom line is that equities aka the stock market, have been the simplest and most effortless way of building real (net of inflation) wealth, and of increasing purchasing power over time at a far greater rate than inflation takes away.