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Strategies & Market Trends : S&P500 Index changes - Guessing game, news and stories -- Ignore unavailable to you. Want to Upgrade?

To: Berry Picker who wrote (6)	3/30/2010 6:37:27 PM
From: Gordon Quickstad	Respond to of 19

This is the only thread I could find on the S&P500. I just finished a bit of "research" about the S&P500 that I found interesting. I was interested in how it is used as a benchmark for other investments. It's common knowledge that dividends make up a very large portion of the index's return over time. " A recent study calculates that during the entire 20th century, fully 61% of the U.S. stock market’s 6.7% annual return came from dividends. " (from the CEO of Berkeley Capital Management) I had assumed that the ^GSPC, SPX, etc. included dividends, but no, it's only pricing data. I guess it stood to reason since it is updated continually throughout the day - impossible to do with quarterly dividends (the total return number is calculated at the end of the day like a mutual fund). Well, that means SPX and ^GSPC are virtually worthless to me since I look for dividend paying investments. It turns out that I want the S&P500 Total Return (the one that shows the 61% mentioned above). Well, would you believe that it is hard to find? You can get it if you pay money to someone (i.e. Google Finance and Yahoo Finance DON'T provide it). Or, I found out, Bloomberg dot com will show it for several years history if you enter "SPTR". So, you can add a bit less than 2% to the S&P500 annual performance and see roughly what you could expect to get with actually owning the stocks composing the S&P500 list. If you buy the IVV (ishares S&P500 index fund) you will find the IVV tracks the S&P500 price just about perfectly (except at about 1/10th the price level - i.e. say 117.00 instead of 1170.00). The S&P500 price does not have anything to do with dividends, however, the IVV will pay out the dividends quarterly. Right now the yield is about 1.87%. So, beware if any investments use the S&P500 price index to compare their performance to - they should be using the S&P500 total Return index which will be about 1.87%, annually, more.

To: Berry Picker who wrote (6)	4/5/2010 8:18:47 PM
From: Gordon Quickstad	Read Replies (1) \| Respond to of 19

This is the only thread I could find on the S&P500. I just finished a bit of "research" about the S&P500 that I found interesting. I was interested in how it is used as a benchmark for other investments. It's common knowledge that dividends make up a very large portion of the index's return over time. " A recent study calculates that during the entire 20th century, fully 61% of the U.S. stock market’s 6.7% annual return came from dividends. " (from the CEO of Berkeley Capital Management several years ago) I had assumed that the ^GSPC, SPX, etc. (different symbols for the same thing) included dividends, but no, it's only an index for the underlying stock pricing data. I guess it stood to reason since it is updated continually throughout the day and dividends come in intermittantly. The index that reflects the true return of the S&P500 is the total return index and this is calculated after the end of trading each day much like a mutual fund. Well, that means that this commonly published index (SPX, ^GSPC) doesn't have much meaning to me for comparison use since I look for dividend paying investments and I like to compare their returns to the total return of the S&P500. It turns out that the "S&P500 total return index" is the one that actually includes the 61% dividend component mentioned above) and it is hard to find. You can get it by subscribing to data feeds that include it but Yahoo and Google finance don't have it available. However, I did find it for free at Bloomberg dot com in a historical chart that includes current value and the chart also goes back for several years history. The symbol on Bloomberg is "SPTR". So, if you calculate S&P500 return from the commonly published figure you are not seeing any dividend performance and you'll be a couple of percentage points shy of its actual total return. As an aside, if you buy the ishares S&P500 index fund (IVV) you will find the IVV pricing tracks the commonly available S&P500 price index virtually perfectly (at a price level approximately 1/10 of the S&P500. But the IVV will pay out the equivalent S&P500 dividends on a quarterly basis. So the IVV total return will virtually give the same total return as the S&P500 total return. Right now the IVV yield is about 1.87%. I don't know if it's a common practice, but beware if any investments use just the S&P500 price index to compare their performance with. They will being using a number that gives them an easier target to match. They should be comparing to the total return of the S&P500 (symbol SPTR) which will be almost 2% per year higher. Now I haven't researched to see if the DJIA also has a total return index and what its symbol would be and how available it is if it does.