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S&P 500 Breaks Even After 14 Years, 11 Months

Written by Gary North on February 18, 2015

The suckers who did not sell the S&P 500 on March 24, 2000 broke even yesterday: February 17. It closed at 2100.

On March 24, 2000, the S&P 500 peaked in terms of purchasing power. It closed at 1527.

Go to the inflation calculator of the Bureau of Labor Statistics.  It is here. Type in 1527 in the box. Set it at 2000. Then click Calculate. You get this: 2099.23.  Let’s forget the .23. Let’s call it 2099.

But of course, if someone sold his position yesterday, he will pay capital gains tax on 573 points of this increase. These are nominal gains. You pay capital gains taxes on nominal gains.

So, the S&P 500 has a lot more to go for the suckers to break even after taxes.

They thought they were going to get rich. They thought the stock market would rise, just as it had ever since August 13, 1982. It didn’t. It gave up the ghost.

They watched CNBC. They read the financial press. What have they got to show for it after 15 years? Losses after taxes.

Yes, there were dividends. These may have paid for fund expenses. If there were any, they were taxed at ordinary rates. Better to have bought income tax-free municipal bonds.

The suckers never learn. “Buy and hold a no-load fund of the S&P 500.” Or buy and hold an ETF of the S&P 500.

Do you think there will be at least one recession over the next 15 years? Maybe two? Count on it.

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