Stock Market Performance Perspectives

How different are stock market performance metrics for:

• Capital gains only, capital gains plus dividends accrued as cash (spent or saved), and capital gains plus dividends reinvested in the stock market?
• Nominal versus real returns?
• Simple return-to-risk calculations versus Sharpe ratio?

Using quarterly S&P 500 Index levels and dividends, quarterly U.S. Consumer Price Index (CPI) data (all items) and monthly 3-month U.S. Treasury bill (T-bill) yield as the risk-free rate/return on cash during the first quarter of 1988 through the fourth quarter of 2023, we find that: (more…)