Annualized Future Total Market Return

I've prepared a simple spreadsheet to project the Annualized Future Total Market Return. The equation used to make this calculation comes from John P. Hussman, of Hussman Funds. Use values found in the article to test the accuracy of the spreadsheet.

To gain access to the spreadsheet move to the right-hand edge of the page and scroll down to Interesting Sites. Then look for the Market Return Spreadsheet link. The spreadsheet is titled, AFTR.xlsx. The xlsx extension indicates I am using a current version of Excel. If you are unable to open the SS, let me know as I can save it in the traditional xls format.

To use the spreadsheet, one needs to work with four variables.

1. Growth Rate of Dividends. Use historical data or select your own percentage projection.

2. Yield of the S&P 500 or Total Market Index at the time of the calculation. When this blog entry was written, the percentage is 2.0%.

3. Expected Yield at the End of the Holding Period. This is a difficult projection. If one expects the market to go up, this percentage will likely decrease. If the market goes down, this percentage will be higher than the current rate.

4. The Holding Period in Years. This one is easy as the spreadsheet user determines over what time frame the analysis is to take place.

Play around with the four variables until you get a feel for what the equation is doing.

Photograph: Lisbon, Portugal

Investing Road Map

Searching for useful investing information is an ongoing task and yesterday I found something of use for every reader of ITA Wealth Management. Paul King has written a 50-page online investment book that is available to download if you will go to the right-hand edge of this page and look for Interesting Sites. Seek out the Investing Road Map link to download the PDF file. You will need to know where on your computer downloads land so you are able to find and open the book.

Readers will find this volume of use as it is an excellent summary of the investing style we use here on the ITA blog. The one thing I would add to the book is a method for monitoring and maintaining the portfolio after it is fully constructed. The TLH spreadsheet is my software of choice. Examples of its use are dotted throughout this blog.


Photograph: ITA author straddling the meridian line in Greenwich, England.