Now that I’ve been eddicated on how to post an image I simply have to post a version of a financial chart that I have loved since I saw my first copy in 1988.
In the graph above, the nominal DJIA is shown in blue, and the DJIA, deflated by M3 (yellow), is shown in red. This chart demonstates the real return, the return in constant dollars (PPP), from 1960 to 2001 averaged 2.5% compounded annually.
(M3 is the measure of the total amount of bucks running around the universe.)
You can read the entire article here.
This chart ends in 2001. Since 2001 the Fed has been increasing M3 by 4 to 5 percent per year. So for all you stock investors – remember to take-off an average of 4.5%/year for the past 4 years to determine your net return.