Stocks are doing even better than you think

(MoneyWatch) U.S. stocks are having an even better year than much of the media is reporting. The Vanguard Total Stock Market Index ETF (VTI) is up 29.9 percent through the end of December, including reinvestment of dividends.

This bests the 22.8 percent YTD return of the Dow Jones Industrial Average (DJIA), a silly price weighted index of only 30 stocks that was weighted down by a negative return for IBM, which was the largest weighted component in the beginning of the year. The total return also bested the S&P 500, as the index return carves out dividends and, combined with the mid and small cap stocks that are not in the index, outperformed the large cap stocks.

Nov 2013 YTD US Stock Performance.jpg — Data from Yahoo Finance

So, anyone claiming to best U.S. stocks using either the DJIA or S&P 500 as the benchmark is being misleading since an index fund can't beat the market. As it happens, the media typically reports index-only returns.

International stocks, which bested the U.S. last year, have only returned 14.1 percent as measured by the total return (including dividends) of the MSCI All Country All World Ex-US index. International stock performance is weighted down by a year-to-date loss of emerging market stocks, though both European and Pacific Rim stocks lag the U.S. performance.

While bonds are down for the year, it has been far from a bond bubble to date. The Barclays Aggregate Bond Index total return is down 1.5 percent YTD.

Those that thought gold was a safe store of value were greatly disappointed. Gold ended the month down 24.5 percent for the year.

Allan Roth

Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.

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