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81 Month Growth Rate
This chart shows the 81 month growth rate of the S&P 500, using monthly average data. We have spliced the Cowles Commission average on so that the can show over a century of data (raw data starts in 1871). The growth is based on price appreciation only, dividends and inflation are not accounted for.
Another extremely high growth rate. July's 81 month growth rate (17.75%, annualized) ranked 9th out of 1439 monthly readings. In other words, it hasn't been sustainable in the past 120 years. It's hard to believe the "New Era for Stocks" predictions of 15-20% gthat will be sustainable over the next ten years, despite the "New Era for Stocks" predictions.
Note: The eight months with higher 81 month growth rates were either in 1929 (August and September) or in the late-1955 to early 1956 period. 1929s readings were followed by a 90% bear market. The July 1956 price highs (monthly average S&P 500) were not significantly exceeded for over two years.
81 Month Constant Dollar Growth Rate
This chart shows the 81 month growth rate of the contstant dollar S&P 500, using monthly average data. We have spliced the Cowles Commission average on so that the can show over a century of data (raw data starts in 1871). The constant dollar S&P 500 is adjusted for inflation by dividing by the Consumer Price Index. The most recent value of CPI is carried forward (since CPI is released after the fact). Prior to 1913, annual CPI figures are interpolated to monthly values. The growth is based on price appreciation only, dividends are not accounted for.
This chart is one of the best examples of inflation overstating growth. The July 1997 constant dollar growth rate was 14.57% (annualized). That's 44th out of 1439. So only 97% of the constant dollar growth rates in history were lower than this one.
Note: With the exception of 1 month (March 1939), all of the larger readings were in 1927-30 or 1955-56.
81 Month Summary
While New Era bulls can argue that we're witnessing a repeat of 1955-6, bears can argue we're seeing 1929 all over again. In neither case were growth rates this high sustainable. If we do have ten years of rising stock prices ahead of us, the only comparable example in history (1955-6) was not followed by 15-20% growth rates as the New Era bulls have argued.