Update: The S&P 500 at Your Fingertips

The latest update of our signature tool, The S&P 500 at Your Fingertips, in which we've brought the tool up to date with all the price, dividends, earnings and inflation data for the S&P 500 through September 2007, comes just as the index has retreated below the new highs it has set in the past week.

For those just discovering Political Calculations, our S&P 500 tool can find the rate of return an investment in the S&P 500 would realize between any two months from January 1871 through September 2007, both with and without reinvesting dividends and with and without the effect of inflation! Here are the S&P 500's compound annual growth rates since January 1871, since September 2006 (Year over Year) and since January 2007 (Year to Date):

Selected S&P 500 Performance Data, January 1871 through September 2007
Annualized Rates	Nominal Rate of Return (%)	Rate of Inflation (%)	Real Rate of Return (%)
Since January 1871	9.17	2.08	7.09
Year over Year	15.64	2.76	12.88
Year to Date	9.70	4.53	5.17

This month's bonus chart illustrates the history of the Price/Earnings Ratio (P/E Ratio) for the S&P 500 since January 1871:

For the chart above, the P/E ratio is found by taking the average monthly price per share for the S&P 500 and dividing it by the preceding 12 months of earnings per share for the index (one-year trailing earnings).

What might be surprising to most people is that the all-time peak in the S&P 500's P/E ratio was set nearly three years after the peak of the stock market in the midst (and previous all-time peak of the P/E ratio) during the bubble market of the late 1990s! This outcome is really a bit of a mathematical artifact - it occurred as stock market earnings bottomed out during the recession of 2001 while the forward-looking nature of the stock market anticipated a recovery, increasing the relative price per share with respect to the past year's earnings per share.

Since then, earnings in the S&P 500 have largely caught up to the index's price per share, which now puts the P/E ratio for September 2007 at 17.40, marginally higher than the P/E ratio's long term average of 14.87.