• 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5

Market Perspective

The following looks at some long-term history for the S&P 500 (since 1950).
I know most perspectives are based on things like P/E and earnings growth, but this is really just looking at past price history.
Any other opinions/perspectives to share?
Note that I am taking no action based on any of this.
[b]A. S&P 500 Price History:[/b]
Overall, the S&P 500 has grown exponentially (from 16.66 on January 3, 1950).  The price (without reinvested dividends) since early 1950 has grown about 147 times, for an annualized increase over 67.5 years of about 7.67% per year.  In the same period, CPI has grown about 10.4 times, for an annual increase of about 3.5%.  The "real" return on price (without dividends) has thus averaged about 4% per year.
If dividends were reinvested (not shown), the total return would be about 11.2% per year, or a real return (after inflation) including the reinvested dividends of about 7.4% per year.

B. The following is the same chart on a log scale:

It is interesting to note a few things:
1. Overall how close the price stays to the trend-line
2. The extended period from the late 1960s until the early 1980s when the market was relatively flat.
3. The obvious bubbles in 2000 and 2008, as well other periods above or below trend.
4. The little squiggles can actually represent some significant changes (since it is a log scale)
5. From the chart it is not at all clear that we are in any kind of bubble now (July 2017).
I hope your chart and pattern interpretation fall at the long end of those historical values.  We need a good shot in the arm before the market falters. As long as past performance does not predict future results, we are at the mercy of chance or as some may call it "organized risk taking".
Thanks for the insight and information.  It is a feel good forecast - especially with all the negativity I hear.   Big Grin
Thanks for sharing the perspective. Do you also have the log chart for the "real annual return with dividend reinvested"? It'd be interesting how the trend-line looks like.
From the trend-line of annualized return- the "past past" did not seem to reliably predict the "past future" - so I doubt whether the past based on the annualized chart can be any indication of the "future". I personally find the "average annualized real return over X year period" chart (X = 10, 15, or 20) to be somewhat more comforting .

Forum Jump:

Users browsing this thread: 1 Guest(s)