The market breaks a record – or does it?

Oh those were reassuring words on the news last night, as Scott Pelley said, “The stock market finally recovered all of what was lost during the great recession.”

Yes – except those numbers leave out one teensy weensy factor: inflation, which has been low, but not zero.

The market yesterday blew right past its 2007 record, but here’s what they don’t tell you on your 401K statement: To truly match the 2007 record in terms of purchasing power, the Dow would have to gain 1,377 points this afternoon. And even if it did, all that would mean was that you matched inflation.

But wait – it turns out the real record wasn’t in 2007!

The REAL record in terms of purchasing power was back in 2000. And to match that, the Dow would have to gain about 1,422 points this afternoon.

In fact, technically, you would be better off today if you’d pulled your money out of the market in 2000 and put it in a baggie than if you’d left it invested.

However, and this is why people keep buying stocks, you can easily manipulate the numbers to create a sense of hope. Because if you’d taken the money out of the baggie in March of 2009 at the bottom of the market, you would have doubled it by now!

$1000 in the S&P in March of 2009 would be $2,070 today. A million would have been $2,070,000. And if you’d been smart enough to invest $1 billion at he bottom of the market, you’d probably be serving ten years for insider trading.

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Calculate the inflation adjusted investment values