Using different deflactors on IndexesHere I put up a series of deflactors on the Nasdaq 100 Total Return...
I like to use Total Return Indexes becuase they acurately reflect the actual growth of the invested money, rather than simple price indexes... I picked the Nasdaq because as you may have noticed from previous posts the Nasdaq is the absolute winner in terms of performance in the last 15 years... also (unfortunately) I did not find a Total Return option for the S&P500 on Tradingview... actually it's quite bad out there, even spglobal.com doesn't seem to publish those anymore, much less deflated with CPI...
Anyway, moving to the chart here we present a series of deflactors applied to the $NDX Total Return since INCEPTION:
1. Gold
2. CPI
3. CPI+DXY
4. M2 (Fred money stock)
5. REAL M2 (Fred money stock with CPI)
I found the Real M2 the most interesting idea, for in a high monetary inflation environment, Real M2, purges the nominal M2 (total monetary inflation) of its price inflation "component", and comes to a somehwat more balanced deflaction than the original metric (435% performance using M2 Real, vs 275% using the Pure M2 deflactor)
