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U.S. stocks hit another all-time high

(MoneyWatch) U.S. stocks eked out another all-time high yesterday, as measured by the Vanguard Total Stock Market Index Fund (VTI). The fund rose 0.42 percent on Wednesday, slightly eclipsing the previous high set last Friday. 

If you had invested $10,000 in this total stock index fund on the pre-crash high on Oct. 9, 2007, as of yesterday you would have $10,446.10. That calculation is based on the total return, letting dividends reinvest. A few fun facts regarding this fund:

  • Up 4.5 percent from its pre-crash high on Oct. 9, 2007
  • Up 11.3 percent from year-end 2007, the highest year-end close ever
  • Up 16.2 percent year-to-date
  • Up 134.5 percent from the market bottom on March 9, 2009

By comparison, the S&P 500 Index, which strips out dividends and excludes smaller companies, is still 8.2 percent off the Oct. 9, 2007 high. Many incorrectly use this number to show market returns, implying that beating this index is equivalent to beating the market.  

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Gains in perspective

Granted, the gains from 2007 are pretty modest. That is until you put them in perspective of what has happened since then. Stocks are slightly higher in spite of:

  • The worst economic recession since the great depression
  • The collapse of giants like Lehman Brothers and General Motors (GM)
  • Global debt crisis that may yet take down governments
  • The downgrade of U.S. debt by Standard and Poors
  • Dysfunctional politicians that have become more concerned with making the other party look bad than with governing

I could go on and on as to why the stock market should be far from the record territory it is now, but the bottom line is that capitalism is far more resilient than many think. 

It appears Vanguard founder Jack Bogle was right when he said in offering investment advice, "Don't do something, Just stand there." 

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