The bull market in US stocks celebrated its fourth birthday in March. We can all thank Fed Chairman Ben Bernanke for the monetary stimulus-fueled rally that has now fully repaired the damage inflicted on the S&P 500 by the 2000-2002 and 2007-2009 bear markets. Including dividends the S&P 500 has climbed 37% since its 2000 high. So why aren’t investors feeling richer? In a word, inflation – the hidden enemy that is eroding accumulated wealth.

Take a look at Doug Short’s chart above of the S&P 500’s return since the 2000 high, both before and after adjusting for inflation. The red line shows the impact of inflation on the S&P 500 – the benchmark is actually flat over the past 13 years.  Currently America’s annual inflation rate is 1.36% which is low compared to peak inflation in March 1980 at 14.76%. Think 15% inflation is uncomfortable? Don’t move to Syria where inflation is running 49.5%.