The Standard and Poor’s 500 (S&P 500) index has been introduced in its current form on 4 March 1957, but it existed previously as well. It has 500 components.
S&P 500’s 10 years history covers the entire financial crysis and 1-2 years preceeding it. Today it is far above its pre-crysis peak (1600 vs 2348). Actually it was rapidly growing since 2009 with short drawdawns, then it seemed to be moving sideways for a year, and now it is growing again.
People often say that long term investments carry less risk than short term ones.
Well, this more or less fits S&P500.
- Index value has grown from 1480 to 2348 throughout the last 10 years which equals only 4.72% annual profit.
- 5 year yield curve spends cca. 50% of time in the negative domain.
- 3 year yield curve seem more volatile than the 5 year one.
What can you see on the chart?
You can calculate S&P 500’s 1 month return from S&P 500’s value today and S&P 500’s value 30 days ago. You can also do the same calculation for yesterday and S&P 500’s value 31 days ago etc. If you do this calculation for each days, you will get a curve of S&P 500’s 1 month yield. The same applies to other yield periods from 3 months to 5 years.
This chart shows the three and the five year yield curve in the past 10 years.
Treshold marked with red shows 0% return.
This chart shows S&P 500’s relative change against the US customer price index in the past 10 years.
There was a quite long period in the past 10 years when S&P500’s return has been underperforming the US customer price index.
*charts are not updated on a daily basis but you can prepare similar charts for yourself by using Chartoasis Sesame. If you feel like analyzing S&P 500’s historical price, you can do that for free at www.chartoasis.com/sesame . You will also need to download S&P 500 historical data. This step-by-ste guide will explain you how to do it.