Year of the Fat Cats

One of the standard year-end rituals is to assess the stock market's performance for the year. Many people noted the Dow Jones index rose a respectable 7.5 percent in 2007. Before anyone celebrates this modest achievement, it is important to remember the Dow includes just 30 blue chip stocks. The much broader S&P 500 index rose by just 3.5 percent, slightly less than the rate of inflation in 2007. In other words, the real return for most stockholders was roughly equal to what their stock paid out in dividends, not a terribly good story.