Total Real Return

As of the end of
NEW STEPS 13
TABLE 1.1 Keeping Up with History?
Total Return Total Real Return
1926–2006 10.4% 7.2%
1946–2006 11.5% 7.2%
1946–1965 13.8% 10.7%
1966–1981 6.0% –1.0%
1982–1999 18.5% 14.8%
1995–1999 28.6% 25.6%
1982–2006 13.4% 10.0%
Returning to the historic pace of stock returns means a big decline from the
pace of the 1990s. Total returns and real total returns, adjusted for inflation,
at compound annual rates.
Source: Ibbotson Associates. Data from Standard & Poor’s.
2006, the price-to-earnings ratio for the S&P 500 stock index
was 17.4, according to Standard & Poor’s. That is above the P/E
average of 16.1 since World War II, although it is well below its
peak of 46.5 for 2001.