Keeping Stock Market Returns In Perspective

We just want to pass on some data to keep this year’s stock rally in perspective.  We are seeing a lot super giddy behavior out there as the S&P500 makes a new all-time high but…wait for it…at record high valuations by almost any measure.

Once again, seeing the analysts retrofit their fundamental based on the market’s current price action —  bullish if it is going up, bearish if it is going down.

That is not new us.  We used to trade, and trade a lot, but learned its almost impossible to beat the ‘bots.   We are back to the “old school” of buying low and selling high, or selling high and buying low though we do put on an occasional trade.  Buying high and trying to sell higher, aka the “greater fool theory” is too risky in an algo driven market.


The data show that the S&P500 index is up 28.50 percent this year, 29.44 percent annualized and up 37 percent from the 2018 Christmas Eve closing low.   But… up only 7.85 percent on an annualized basis from the September 2018 local high and just 6.21 percent annualized from the January 2018 local high.  The upshot here is all about the price points of your buys.

We just can’t see how buying the indices at today’s levels is going to make you much money over the next, say ten years, unless we become Venezuela, where the stock market is up 10k percent in 2019, but that ain’t real, folks.

Political S&P

To keep President Trump’s Tweets about the “greatest stock market ever” in context:  the S&P500 is up an annualized 12.70 percent since he took office versus an annualized 13.83 percent return for President Obama’s entire two terms. [Correction:  an earlier mistakenly used an erroneous end date, which grossly inflated the Obama S&P return].

Of course, the rational analysis would concede President Obama took office during a massive economic and stock market crash, but politics ain’t rational folks.  Just check your Twitter feed every morning between 6 am and 9 am for confirmation.

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1 Response to Keeping Stock Market Returns In Perspective

  1. Pingback: Beware Of Market Tops And Trump’s Race For Stock Market History | Global Macro Monitor

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