After my post on the worst stocks to buy in 2012, I have decided to calculate the average stock market return for 2011..

Note that some calculations for the stock market return assume a certain fixed dividend rate, I don’t. In this post I am just tracking the indexes to see how much they went up (or down) in terms of points and percentage. As we all know, there are several indices (or is it indexes?) in the US Stock Market, so here are these indexes, and their average return for 2011:

• S&P 500: The Standard and Poor’s 500 index went down 0.04 points (a negligible percentage). The S&P 500 index is a major metric to measure the stock market return, so, if you want a short answer (and you don’t have time to continue reading this post anymore), the market, on average, didn’t move in 2011. Maybe we should thank BAC and C; both reduced the total value of the S&P by about $200 billion.

• NASDAQ Composite: The NASDAQ composite went down 47 points, or 1.8%. Note that the NASDAQ loss would’ve been bigger but Apple was there to the rescue, as the heavyweight stock went up around 25% in 2011, lifting the index. (here’s a little tidbit on the NASDAQ, in case you’re wondering when it was created and what does the word NASDAQ mean). The NASDAQ lost a lot of money because of once-loved-now-very-hated companies such as Netflix and RIM.

• Dow Jones: The Dow Jones index went up 640.05 points, or 5.53%. Mind you the stock that lifted this index was XOM. It went up 15.92% in 2011 and it constitutes almost 11% of the Dow. This stock alone lifted the whole index around 1.78%.

So, what was the average return on the stock market in 2011? Well, as you can see from the above, not much, it was almost 0 (Again, the S&P 500 is the metric that most financial companies use to measure the performance of the stock market during a specific period). This is normal immediately after a recession (but are we out of the recession yet?). Will 2012 be better? I don’t know, and I’m sure that no one else knows. It’s all speculation, but from the looks of it, people now think that 2012 is a great year (didn’t they say the exact same thing about 2011 before?). It seems that in January everyone forgets about the January effect, and those who do remember about it, claim that it’s only a myth. A myth that materializes every single year!

As I always like to say, only time will tell!

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