calculating-stock-market-growth.md

Calculating Stock Market Growth

Historically, the stock market has trended upward. You can calculate the growth of the stock market between any two points of data in this dataset.

Formula

The growth of the stock market is given by:

growth = (endCost / startCost) - 1

Where "cost" refers to the value of a share.

In this formula, growth will be a percentage. For instance, if you compute a growth of 0.23, then you could say:

"Over this time period, the stock market grew by 23%"

Cost in this Dataset

The cost of a share of the S&P 500 is available under the comp key in this dataset.

The following code snippet demonstrates how you can access the comp for the first month in the dataset (which happens to be January 1971).

import stockMarketData from 'stock-market-data';

// The cost of a share of the S&P 500 for the first month in the dataset
const sharePrice = stockMarketData[0].comp;

Example

From the data, we can see that the comp in January 2015 was 1918.6, and the comp in January 2016 was 2028.18.

Placing these values into the equation from above, we can compute the growth over this period of time:

growth = (endCost / startCost) - 1
       = (2028.18 / 1918.6) - 1
       = 0.0571

Note that this is the decimal representation of the growth. To convert it to a percentage, we must multiply this value by 100.

Once we do that, we get our result: the stock market grew by 5.71% between 2015 and 2016.