Wednesday, July 22, 2009

Two great calculators from PoliticalCalculations

In prepping for a class today, I found these. They are literally perfect for any introductory finance class as well as for investors who are just curious.

1. Historic Rates of return from any two points of time: It really is important to realize that the past may not repeat itself.

From PoliticalCalculations:
" Now however, everything has changed because we here at Political Calculations are putting the entire encapsulated history of the S&P 500 at your fingertips!

We've taken the raw data from the sources linked above, and made it easily accessible by selecting a month and year in our tool below. The tool will provide the average index value of the S&P 500 for the given month and year, the associated dividends and earnings for that month and year, not to mention the dividend yield and the price to earnings ratio. For good measure, we threw in the value of the Consumer Price Index as well!"

2. How much an investment would have grown from and to any point in time from 1871 (yeah, so the data may not be perfectly clean, still a good look!)

Political Calculations: Investing Through Time:
"All you need to do is to select the dates you want to run your hypothetical investment between and to enter the amount of money to invest either from the very beginning or to add each month (beginning with that first month you select) for the duration that your investment runs.

We'll determine how much your investment would be worth assuming the amounts invested are adjusted for inflation for each month the investment is active and accounting for the effects of either not reinvesting dividends along the way or fully reinvesting dividends"

What is PoliticalCalcuations? From the site: "Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too!"

Great stuff!


Of course all data should come with a warning on its use. Zvi Bodi provides us one

"You should caution readers that the historical data on stock returns is being misinterpreted to imply that stocks are not risky in the long run....This is misleading and invalid. The figure merely illustrates that the dispersion (standard deviation) of an N-period average rate of return declines as N increases."
I will write more on this soon.

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