This is true, but would actually compel the stock/gold ratio to become more favorable to stocks (except for the fact that the stock supply is also increasing).
The egg thing is actually rather dishonest -- eggs have gone way up, due to (among other things) the continued popularity of the Atkins diet. So egg stocks have, well:
The S&P, which models a portfolio of 500 large-cap stocks weighted by market cap, is adjusted for splits and dividends. Splits effect neither the index value nor the weights, and dividends are implicitly assumed to go back into the portfolio, altering the weights but not the cash value. So what the S&P tracks is the performance of this portfolio, with cash dividends immediately reinvested. In other words, the returns calculated include dividends.
The S&P index is a damn good measure of market performance, since, although only 500 stocks are included, it comprises about 80% of US equities by market cap. (Wiltshire 5k is theoretically better, but the practical difficulties in index arbitrage on 5000 stocks, many illiquid, make S&P futures more popular.) The Dow, on the other hand, is a terrible index. It's not weighted for market caps, which means that if a Dow company splits its shares, its weight in the index declines, for no good reason.
I think you're mistaken in believing that the S&P 500 Index includes the value of reinvested dividends. The number
you're describing is a separate one called the "total return."
S&P/gold reflects gold speculation, so I don't take too much out of that. S&P/oil is more disturbing, because despite the complaints about oil speculators, the fact is that the current oil run-up has a lot more to do with geology and international politics than "speculators". However, if you want to see the real, incontrovertable proof of a "silent crash", look at S&P/euro. It's ugly.
The 1980s-90s bull market was fed by a couple of factors which are not likely to repeat, and if anything, will unwind. The first is that a lot of middle-class people came into the stock market, due to online trading and the replacement of traditional pension funds with 401k plans. Until 1980, stocks were considered a rich peoples' game, too risky for the mom-n'-pop investor. In 2008, after US equities showed an abysmal performance, it's unlikely that many new investors are going to come into them as they did in the '80s.
The second factor is that there has been an expansion of large corporations into all aspects of American life, with Wal-Marts knocking out local shops and mass media gaining ownership of average Americans' minds and desires. This trend is going to reverse for two reasons. The first is that our fairly long-standing energy crisis (call it "peak oil" if you wish) is going to make a lot of corporate business models less competitive, leading to increasing localization. The second is that upper-middle-class Americans, who drive the culture and started this trend toward suburbanization and corporatization in the 1920s-50s, just don't like corporate anymore. They buy produce at farmer's markets, avoid chain restaurants, and prefer the internet over TV. These two factors are going to cause a glacial retreat of the corporate state that will continue even once the economy starts to recover.
Good analysis, to which I would add: peak debt. There is only so much debt a person can take on, and for now at least, that amount has been exceeded.
Much of the financial innovation of the last few decades has been about pricing risk so efficiently that larger and larger amounts of leverage can be employed without the borrower going under. This was the ultimate driver for higher asset prices (in particular homes), which in turn via mortgage equity withdrawal and other means have funded a lot of the second houses, extra cars, big screen televisions, and other luxuries we see around us today.
The credit crunch will soon extend to credit cards and auto loans, and we'll see disposable income fall further. Share prices will fall as earnings disappoint and most investors, seeing no dividends and unlikely capital gains through the recessionary period, will abandon ship.
