If it weren’t for concerns over government debt burdens around the developed world, equities might actually rally. The following chart, which compares the price of the S&P 500 Index versus the book value per share for the S&P 500 Index, indicates that compared to 2000, investors today are getting two times the book value for the same price or less. Annual earnings have also grown. In 2011, owners of the S&P 500 stocks received $98 in earnings per share versus a peak of $57 per share in 2000.

Source: Standard & Poor's

Despite these relatively attractive prices, 2011 turned out to be a below-average year for equity performance. Though we all like to see the nominal value of our portfolios rise, we should take solace in the fact that our equities are more valuable.