These are my last words on this topic I promise. We have learnt that merely taking the average annualised return for an index and then back dating that figure to achieve a hypothetical magical figure is naive and reflects a tremendous lack of knowledge as to how markets work. Likewise suggesting that someone simply buy all the stocks in the index back in 1984 and hang onto them is also stupid.
However, I was wondering where this idea originally came from so I did some google fu last night and found that the funds management group Vanguard had released an article will an interestingly similar figure in it. You can find the original Vanguard piece here and I have snipped out the relevant chart below.
There is our magical start date of 1984 and our terminal figure of $278,615.