Following my post Equity Valuation Matters, I received a request to show the results in real terms. Here you go...
Please note this still misses a HUGE sources of return (dividends), which accounts for a much larger share of actual returns than people think. An almost identical amount as change in index in fact (dividend yield has averaged 4.49% since 1871, while returns on the index have averaged 4.45% over that same time frame). It makes the current ~2% dividend yield look awfully small.
I will look to show results of total S&P 500 return vs. the Fair Value method next week.
Source: Irrational Exuberance