Your math is of course correct, but I would turn the interpretation around:

On a 100-year scale, a 'tiny' 0.5% drop in compound return is massively 'important' in effect. It's no consolation to the person with 40% less money that his annualized performance was only 0.5% worse; you own the $1320, not the 7.45%.

"8%" is often thrown around as a long-long-term guesstimate of stock returns; if in fact that's slipped to 'merely' 7.5% based on the last year, that's remarkable.

The hit against the annualized rate within timeframes more like the earning careers (or even lifespans) of News.YC readers is also big. Here's an interesting graph for S&P total return over the last 20 years:

http://mahalanobis.twoday.net/stories/5279642/

A dollar from 1988 was giving near (or far over) 8% annualized return until mid-2007; now it's more like 5%.

My point is there are plenty of large swings in the history of the S&P 500. It's up 15.38% from 10/9/2002, and down 41.33% from 3/24/2000. The BMW World for Iceland is down 99.44% over the last year which drastically changes their long term returns. But picking a peak or valley is not the best way to calculate returns.

http://www2.standardandpoors.com/spf/pdf/index/112808_Worldb...

IMO picking a peak or valley is less informative than what happens when you invest one inflation adjusted dollar every month over the history of a stock exchange. Add in selling off 1-4% a year and you can see what the stock market does for normal peoples investments.