*The Snowball*, and right away I'm confronted by another mysterious Buffett utterance. This is in Chapter 2, "Sun Valley, Idaho, 1999." Buffett is giving a talk. This is of course the author's telling, so I don't know if she was working from an accurate transcript.

Did Buffett mean what he said? Did he seriously overlook dividends on the Dow? That seems impossible. But, if not, whatDOW JONES

INDUSTRIAL AVERAGE

December 31, 1964 874.12

December 31, 1981 875.00

He walked over to the screen and started explaining.

"During these seventeen years, the size of the economy grew fivefold. The sales of the Fortune five hundred companies grew more than fivefold. Yet during these seventeen years, the stock market went exactly nowhere."

*did*he mean?

Total return over the full time period, with dividends reinvested, was 116%; annualized CAGR, 4.63%. In total return, it didn't "go exactly nowhere."

Well, what about inflation? He says "the size of the economy grew fivefold." According to this web page, Nominal GDP was $0.686 trillion in 1964; $3.211 in 1981. That's a factor of 4.68, so he is clearly talking in nominal, not real terms.

Adjusted for inflation, total return over the full time period was -28%; annualized CAGR, -1.94%. In total real return, it

**still**didn't go "exactly nowhere," it lost money. But then, real inflation-adjusted GDP didn't "grow fivefold," it grew by a factor of $6.618 / $3.734 = 1.77 X, not even close to "fivefold."

Well, yet again... there doesn't seem to be any way to know what he actually meant. Did he really overlook dividends on the Dow? That seems impossible. But what, then,

*was*he doing?

Source: "Dow Jones Return Calculator"