Sanjib Saha
12 November 2024
The S&P 500 Index reached two celebratory milestones this year. The first was to top 5,000 for the first time in Feb 2024. The next was to surpass the 6,000 mark this week.
Here’s a brief history of its journey to 6K.
- March 1957 – The current version of the S&P 500 Stock Index was introduced to capture the stock market performance of the 500 largest US companies. At that time, the index was at around 44.
- August 1967 – The index more than doubled in the preceding decade to end at around 94.
- May 1985 – After a prolonged slow-growth period of over 18 years, the Index doubled again and ended above 188.
- March 1991 – A bull market, followed by the largest single-day decline in 1987, and a subsequent recovery saw the Index to double and end at 375.
- November 1996 – The ensuing dot-com frenzy doubled the Index to 750 in slightly over 5 years.
- August 2000 – The peak of the dot-com bubble doubled the Index to 1500 in less than 4 years.
- October 2019 – Thanks to two severe bear markets, it took the Index nearly 20 years to double and cross the 3000 milestone.
- November 2024 – The pandemic and two more bear markets didn’t stop the roaring Index to redouble to its current level of 6000 in about 5 years.
The S&P 500 Index has doubled seven times in the last 70 years**. Sometimes it took just a few years and sometimes it took nearly two decades.
With several market crashes and euphoria along the way, the journey wasn’t for the faint-hearted. But the long-term investors who faithfully counted on the stock market were handsomely rewarded for their patience.
If history is of any guidance, the stock market is not for making money in a short time, but it’s a solid place to be for building wealth over a long time, especially through regular investments in inexpensive, diversified funds.
** Excluding dividends. The actual market return in this period including reinvested dividends was much higher – 10.6% vs 7.5% per year.