Kelly Evans: The stock market has done even better than you think

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I’m running the numbers just to get a feel for things as I get ready to go back on the air on Tuesday. The market has certainly taken off this year, at…

I'm running the numbers just to get a feel for things as I get ready to go back on the air on Tuesday. The market has certainly taken off this year, at least until the recent soft patch. In general, everything has done far better than I expected post-Covid. Maybe it really is the AI boom. Maybe it's the still-ongoing fiscal stimulus. Maybe it's the immigration surge. Who knows.

So, the S&P is up a healthy 7.5% since January 1. The Dow is up a more modest 2.6%. But here's the catch: those numbers are actuallyWhy? Because that price performance doesn't include dividends, which actual investors who own the indexes get to pocket--or more crucially, reinvest.exist today to show the real, all-in returns. The problem is, if we ever switched over to reporting it that way, the average American's head might explode.

if they are only comparing their performance to the price indexes. It even means supposedly"winning" funds are getting flows they don't merit, since funds typically follow performance. But it also means that failing to reinvest your dividends is a really big deal. All of this stems from the fact that when stocks go ex-dividend, they drop in price. They didn't"lose value," or finish"in the red" that day because of some actual economic change. They simply lowered in price to reflect the cash amount paid out.And if you not only include, but also reinvest the dividend, your total returns over time skyrocket.

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