700% Return! As S&P 500 Reaches New All-Time High of 2,000

How long do you think it will take for the S&P 500 to reach 4,000 or the Dow to reach 34,000?

I started my career in finance back in 1986, when the S&P 500 index was under 300. Today, it crossed the 2,000 mark, which means that it has climbed nearly 700% and that doesn’t count dividends!

As an investor or advisor, one thing you need to be aware of is that THERE ARE NO PREDICTABLE PATTERNS IN THE RETURNS, except that over many years the direction has been constantly higher.

Time it took for the S&P 500 index to double in value:

Screen Shot 2014-08-27 at 2.42.02 PM

For the S&P 500 to go from 1,600 to 1,700, it took 16 years (1997-2013). This reflects the big drop in 2008/9 and the lost decade that created as it relates to investment returns.

The world we live in today hardly resembles what it looked like in 1986.

What was going on in 1986??

superbowlshuffle_wideMichael Jordan was several years away from winning his first NBA title. The Chicago Bears had just won the Super Bowl. There was no internet. Today, we find it difficult to live without internet for very long as many use it daily.


Satellite TV did not exist. You couldn’t record shows on a hard drive; you couldn’t even pause, fast forward or rewind a TV show. The idea of a company’s lifecycle has changed remarkably. Remember Blockbuster? What a high flying fast growth concept that took off like a jet and was made extinct by other technology in the blink of an eye.

I bought my first laptop in 1993 for $3,500 (it had a color screen, which made it very expensive) and a 25 Megahertz speed (Pentium is 486). Now, it’s a paperweight.

I bought my first cell phone in the early 1990’s. It was huge and was really more of a car phone as it had to be plugged in to work. Imagine a life without a cell phone. Many people don’t even provide a home phone number.

What will things look like 25 years from now?

No doubt, much different than today.

Where will the S&P 500 and Dow Jones be in 25 years?

How fast will the indexes double? If the past is any indicator, they could easily double twice over that time period meaning the S&P 500 would be at 8,000 and the DOW at 68,000.

I know those numbers seem outrageous, but no more so than when the DOW bottomed out at 1738 after the stock market crash in 1987 and has moved to over 17,000 or ten times higher since.

The best news is the earnings of the companies which make up these indexes are what ultimately cause the share prices to rise.  Those earnings continue to grow over time and on a relative basis are advancing overall.

Related Posts:

DOW nears 17,000; Where’s the Euphoria? 

When Will the Market Plummet?

Should a Stock Market Drop Worry You?


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  2. I agree, my plan is to invest $1000 per year from now (2015) to forever. According to my calculations, if SP500 drops to 800 and then rises to 4000 by 2040, I will have invested $25000 and the value of the portoflio will be $75000. (Interesting note = if it does not drop at all and rises linearly, profits will be much less).

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