If you pay even the slightest bit of attention to the stock market, you will have heard by now that the Dow Jones Industrial Average (DJINDICES:^DJI) finally beat its October 2007 all-time nominal high this week (the qualifier is important; more in a moment). Leaving out the fact that the price-weighted Dow is a flawed index (the broader, capitalization-weighted S&P 500 (SNPINDEX:^GSPC) is less than 1% from its 2007 high), is there any real significance to this milestone?

Well, for one, it's good reminder that, although the U.S. stock market has been a remarkable wealth-creation engine over time, it periodically suffers long periods of stagnation; both of these characteristics are clearly visible in this chart of the Dow's full history (the scale is logarithmic, and the vertical grey bars indicate recessions):

The massive decline the stock market suffered at the height of the credit crisis in the fourth quarter of 2008 and the first quarter of 2009 is clearly visible in the upper right corner of the graph. That decline was severe enough that it has taken the Dow nearly five and a half years to get back to its October 2007 high. Or did it? The following graph, which shows Dow values on an inflation-adjusted basis, beginning in 1999, tells a different story:

Once inflation is accounted for -- and make no mistake about it; inflation is a cost -- not only has the Dow not recovered its 2007 high, but it remains below levels established in 1999! That's terrible news for long-term investors. Thankfully, that isn't the end of the story, for capital gains aren't the only source of returns for equity investors. What about dividends? Inflation is a cost, but no one should ignore dividends in tallying returns. Here's what the Dow chart looks like, including dividends and  after inflation, from 1999 onward:

Source: Author's calculations, based on data from S&P Dow Jones Indexes and the Bureau of Labor Statistics

As the chart shows, the 2000s were undoubtedly a tough decade for equity investors, but they were no "lost decade" -- even in real terms.