Party!

CNBC yesterday was celebrating its 19th birthday, and in the spirit of sharing it threw some numbers up onscreen (these are best guess from memory). Since the channel's inception, the indices are up like this:

S & P 352%
Dow Jones 440%
NASDAQ a little bit higher even.

Lets talk about the Dow. Just using the rule of 72 to guide us (if rate x number of periods = 72, then you double your amount) we can see that the Dow has a little more than doubled in 19 years. If it doubled twice in 20 years, the rate would be 7.2%, so lets say the Dow has been rising 8% a year to get 440% over 19 years. Before inflation. Lets knock it down two points to control for inflation and we've got a 6% real rate of return. That's below even conservative estimates of historical inflation-adjusted returns. And returns for the broader S & P are lower.

And this during the heyday of CNBC, since 401ks blossomed and equity markets got huge retail
inflows. What it implies is that the new slap-happy capital markets aren't really doing that superb a job with our money.