One important thing that the Journal doesn’t take into account in its Dow calculations (and which I don’t above, either) is total returns, which are stock returns calculated with dividends reinvested. That would make the inflation-adjusted returns higher, though dividend yields have been low and many don’t reinvest their dividends (Dow Jones Indexes tells me the Dow’s total return from December 28, 1999, to December 28, 2009, was 15.3 percent. Inflation during that time was between 26 percent and 30 percent, meaning you still lost more than 1 percent a year in real terms).

But neither does it take into account the very real transaction costs that eat up capital. These also don’t take into any effects from dollar-cost averaging, which is what you do when you withhold money from at regular intervals for your 401(k), which means you buy at lows and at peaks over a given timeframe.

The Journal does report a total return number on the S&P 500 from an analyst who’s taken transaction costs into account, but it goes back to 1978, which is something of a cherry-picked year since it was near the inflation-adjusted trough of the market before it blew sky-high in the 80’s and 90’s. Even that nets just 4.5 percent a year.

You have to wonder if there’s a connection to be drawn between the low savings rate and the idea that took hold in the last three decades, which still hasn’t been extinguished even after this miserable decade, that investing in stocks means you’ll get big returns on your money.

The WSJ story is excellent here:

Prof. William Hausman at the College of William & Mary long has urged the media to offer people inflation-adjusted stock charts. He says newspapers and analysts frequently point to the Dow’s 2007 record of 14164.53 and talk about how far the Dow would need to climb to return to that level. In inflation-adjusted terms, however, the Dow in 2007 never quite surpassed its 2000 record, Prof. Hausman calculates. To return to an inflation-adjusted record now, he adds, the Dow would need to break 15000.

“It really puts in perspective how stocks are doing,” he says.

Indeed. The press should account for inflation when it talks about stock prices—whether it’s for the overall market or for individual issues.

The Journal’s piece is a very good start.

Ryan Chittum , a former Wall Street Journal reporter, is deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.