I just saw some comments about “everybody” being richer these days with the Dow in all-time high territory. We can just look at all the mortgage defaults to know that’s not the case! And don’t even get me started on drawing conclusions based on the Dow. No doubt there are many who are richer now. But I also have no doubt that there are many more who feel and/or think they’re richer but may not actually be better off than before.

The first thing came to my mind was “richer compared to what or when?” Richer compared to spring 2000 or late 2002 / early 2003? That may make a huge difference depending on how and if you were invested at those points in time. I doubt that many people’s returns track any index exactly but here are some numbers for some indices (these numbers are approximations and not measured from exact tops or bottoms):

  • S&P 500 — down 1% from April 2000 and up 70% from March 2003
  • Dow — up 15% from April 2000 and up 57% from March 2003
  • Nasdaq — down 38% from April 2000 and up 81% from March 2003
  • Russell 2000 — up 62% from April 2000 and up 125% from March 2003

So assuming your investments tracked the Dow or Russell 2000 you probably do feel richer. If they tracked the Nasdaq since 2000… maybe not so much. But there are plenty of other scenarios where your answer will vary depending on how you manged your investments.

The other point that needs to be made is that while some may feel richer and actually own more dollars, what are those dollars worth? The dollar is down 23% since April 2003 (to use the same date as above) and down 31% from a peak in July 2001.

When you factor in the fluctuating dollar the answer to whether or not one is richer these days really comes into question. One might have more dollars (pieces of paper) than before but are they actually worth the dollars you had at some earlier point in time?

The monthly charts of the above-mentioned indices are below: