US stock growth during “Roaring 20s” similar growth in 1990s

by Catherine Mulbrandon

in Bubbles, History of the United States, Other

Another stock graph similar to Exponential Growth Rate of US Stocks since 1871 except this one is plotted on a semi-log scale to help illustrate the price movement of S&P Composite Index. For example, the percent change in the index’s value during the 1990s “Internet Stock Bubble” (a little over 250%) was similar to the price change during the 10-years preceding the 1929 Stock Market Crash.

You can find the data at IrrationalExuberance.com

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Tagged as: Bubbles, Financial markets, Line Graph, S&P 500, United States

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http://1boringoldman.com John Nardo

When I did this with the GDP rather than the CPI as a corrector, it was a level line [I used the DOW]…
http://jazzbumpa.blogspot.com/ jazzbumpa

I made a similar, but not identical, graph using the “real price” column form Shiller’s XL file.

I plotted monthly ln(real price) vs time. My Y-scale runs in the range of 4.5 to 7. Ah – I see – you plotted the data in log fashion, while I made a regular plot of ln(data). I put in a best fit line using the built in Slope and Intercept functions of Excel, which I think uses the least squares method.

Most obvious difference is in mine, the 2009 minimum goes very briefly below trend line in’09, while yours stays well above. There’s lots more fine-grain detail in mine as well. Did you plot the actual monthly data, or something like an annual average?

I’m thinking we’re due for several years of below trend line performance. Am I being too pessimistic?

Cheers!
JzB
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http://www.WeMatter.com Mike Liveright

Thanks for the “Long term …” chart, I’d like to see some other charts and have some of the regression numbers…
e.g. I’d like to see the chart of the
1) Social Security effective value, e.g. the Amount that a worker would recover from SS at various times so that we can see how BAD SS is, the
2) Housing Prices, the
3) Prices and Returns of other indexes…
4) GDP and other measures of the economy

Also when these results are presented THANKS for using LOGs, I would also like to know the long term growth rate. e.g. doee the S&P grow at roughly 3% per year, or whatever?

P.S. I assume this has no adjustment for the value of the Dividends during the period shown as well as I don’t know how to compensate for any adjustments in the S&P composition, e.g. Companies that went belly up and others that may now have been around in 1871.

Regardless of the “I want more”, THANKS for this chart and the work that you are putting into these analysises.
Sean McCarthy

Dear Catherine,

Remember that stock returns are the sum of capital gains and dividends. Quoting average annual price gains by themselves is slightly misleading since it leaves out the dividends.

Cheers,
Sean
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