The ICA Guide

Fed raises interest rates
six times
57.3
,180.6
407.2
,753.9
Dow tops 4000, then 5000 —
market “too high”
61.7
2,779.7
450.1
20,578.7
Technology stocks stumble
64.3
3,247.9
480.1
24,560.6
Chaos in Asian markets
67.0
4,142.7
510.3
31,881.2
75.4
5,008.2
584.1
39,193.5
82.8
5,748.5
651.8
45,682.2
93.0
5,875.5
743.4
47,435.2
804.1
45,258.6
0.2 +30.6 +19.3 +29.8 +22.9 +16.6 +3.8 –4.6
Global economic turmoil
Fears of Y2K
computer problems
994 1995 1996 1997 1998 1999 2000 2001
Internet bubble bursts
Terrorist attacks in U.S.
99.0
5,507.5
Corporate accounting scandals
2002
100.7
4,616.9
833.3
38,709.1
–14.5
U.S. invades Iraq
2003
102.2
5,713.5
864.3
48,891.6
+26.3
Oil prices soar
2004
103.0
6,163.0
887.4
53,674.5
+9.8
Hurricanes devastate
southern U.S.
Not drawn to scale
This chart is based on a logarithmic scale, so it
uses smaller and smaller increments for larger
numbers. If the scale were arithmetic — with, say,
one inch representing every $10,000 — the dark
blue area (indicating results if dividends had been
excluded) would be 52 feet tall, which is about as
tall as most five-story buildings. The lighter blue
section, which shows how the investment would
have done if dividends had been reinvested in
more shares, would be 531 feet tall — more than
three times the height of the Statue of Liberty.
This illustrates the difference reinvesting your
dividends can make.
2005
136.3
6,446.5
1,196.3
57,361.4
+6.9
Dow Jones tops
12000 for first time
151 ft.
2006
152.1
7,313.2
1,364.6
66,504.4
+15.9
Subprime credit crisis
ICA
(dividends
reinvested)
2007
144.0
7,601.9
1,319.3
70,456.8
+5.9
U.S. recession
2008
156.9
4,835.7
1,466.7
45,983.8
–34.7
U.S. unemployment tops 10%
ICA
(dividends
excluded)
531 ft. 52 ft.
2009
131.5
5,986.9
1,264.7
58,481.1
+27.2
Gulf of Mexico oil spill
2010
129.2
6,496.8
1,272.4
64,830.6
+10.9
European sovereign debt crisis
2011
133.8
6,249.9
1,345.5
63,692.5
–1.8
ICA with dividends
reinvested
$63,692,508 1
Average of
11.9% a year
Stock market with
dividends reinvested
$24,974,688
10.5% a year
ICA with dividends
excluded
$6,249,919 2
Average of
8.6% a year
Stock market with
dividends excluded
$1,245,149
Average of
6.4% a year
Consumer Price
Index (Inflation)
$170,964
Average of
3.7% a year
Original investment
$10,000
Average
annual
total
return for
78 years:
+11.9%