How Has the S&P 500 Really Performed Since 2001 (When Accounting For The US Dollar)?

All investors know the 2000’s has been a 'lost decade' when speaking about the stock market. Since the turn of the century all major US Stock market averages are down, and the S&P 500 and the NASDAQ are down significantly. But when one looks even deeper into these indexes with the affects of a falling US Dollar taken into account the returns are even bleaker.

I took the nominal S&P 500 values since June 2001 and stripped out the affect of the US Dollar to arrive at a 'real S&P 500' value which truly reflects the change in wealth a US investor would have experienced. I did this by adjusting the nominal S&P 500 values for the US Dollar Index, which measures the value of the US Dollar relative to a basket of 6 different foreign currencies.

The chart below summarizes the nominal vs. real S&P 500 values:

 As you can see, while the nominal S&P 500 dropped from 1225 in June 2001 to 1097 currently ( a 10.4% cumulative drop) the 'real S&P 500' value dropped from 1225 in June 2001 to 680 currently ( a 44.5% cumulative drop).