The Denver Nuggets were one of 5 NBA teams to never appear in an NBA Finals series. Operative word “were”, as they are set to tip off tonight against the Miami Heat in Game 1 of the first NBA Finals in franchise history. It has been 49 years since the team adopted the Nuggets name in 1974.
What can that same 49 year period teach us about investing?
Pretend that in June 1974 you invested money in one share of the S&P500 Index. That share would have come with a price of $89.79. The 500 companies comprising the index produced $8.74 in earnings per share. Your investment would pay you $3.50 in dividends per share. Fast forward 49 years to the year 2023.
The 500 companies comprising your index now generate $178.36 earnings per share. That is a 20x increase since 1974. Your investment now pays you $68.41 in dividends per share; a 19x increase.
What is the value of the index, you ask? 4,121 – which is a 45x increase from your original investment.
But life is so much more expensive compared to back then. So, what about your cost of living over those 49 years? In June 1974, the Consumer Price Index (CPI) – a widely reference gauge for inflation – was at 49. Today, it is 303. That is a 6.2x increase over 49 years. In other words, the dividends and earnings from your investment outpaced inflation by three times. All the while the value of your investment increased more than sevenfold compared to the cost of living.
What was required of you, the investor, to achieve these gains in value and dividend income? Staying invested and focused on your long-term goals. Admittedly, that is much easier said than done. Much like the many torturous losing seasons Nuggets fans endured before finally breaking through to the NBA Finals, investors faced plenty of uncertain, tumultuous periods over the last five decades.
Hopefully the historical investing nuggets (pun intended) outlined here will help provide perspective and endurance for investors over the next 49 years. One widely reported key to the Nuggets eventual success was finding the right coach to lead the team. Investors too can benefit from finding the right advisor to coach them to and through their goals. If you have been wondering if you might benefit from professional financial guidance, I would be happy to connect.
Hello! I am Danny Kellogg, an LPL Financial Advisor with Prosperion Financial Advisors. The best part about my job is using my experience and education to help clients discover how their financial resources can serve them. To deepen my knowledge and demonstrate my dedication to serving clients at the highest level, I became a CERTIFIED FINANCIAL PLANNER® and Retirement Income Certified Professional®. My wife Elizabeth and I are both proud Colorado natives. We live in Centennial, CO with our daughter Libby and golden retriever Aggie. I am an avid Colorado sports fan who enjoys cheering on the Rockies, Broncos, Avalanche, Nuggets and Colorado State University Rams. When I am not helping clients, I enjoy spending time with my family and playing golf.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk, including possible loss of principal. All examples are hypothetical and are for illustrative purposes.
https://prosperion.us/wp-content/uploads/2023/06/basketball-shot.jpg6561200Danny Kellogghttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngDanny Kellogg2023-06-06 15:25:402023-06-06 15:25:40Investing Nuggets 49 Years in the Making
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