The Long Term Trendlines for the S&P500
Diupdate
We've seen a few bubbles in the last 40 years in the stock market.
Here are a few comments on the major bubbles and news items.
Note how Nixon went out the same way that George Bush went out - ugly in the polls and ugly in the stock market. And note how the party switched in both cases and then malaise set in, for similar reasons - a lack of economic growth. In the former example, we had inflation due to an opec-induced cornering in the oil market together with a lack of central bank intervention. In the current example, we had deflation due to worldwide capacity increases and excessive central bank intervention.
Note the "Calls for Peace" mark the top prior to major stock market melt-downs 1973 & 2007.
Note the Peaks in 1973 and 2000 and 2007 were at times when the collective group of 50 or so hot stocks had a P/E of 50 in 1973's Nifty Fifty, then in 2001 the PSR (Price to Sales Ratio) reached well beyond 50 preceding a crash, then the P/E of a house reached beyond 50 prior to the Gov't cutting the leverage down in banks to reduce lending to an overpriced asset (real estate).
Note the "internal trend" that has paced along this whole time, but also keep in mind that it isn't adjusted for inflation since it is a "nominal" price and not a "real price". One share of the S&P500 might buy 2 ounces of gold now, but that isn't always the case. It changes around a lot. How much land does 1 share of S&P500 buy? These are the important questions in the long haul, what does your one share of the S&P500 buy? What is the dividend income from that one share? And what does one share earn?
There are many more stories in this long term chart pattern that I would love to share. Feel free to comment below or ask questions.
Best regards,
Tim West
12:00AM February 24, 2017
Here are a few comments on the major bubbles and news items.
Note how Nixon went out the same way that George Bush went out - ugly in the polls and ugly in the stock market. And note how the party switched in both cases and then malaise set in, for similar reasons - a lack of economic growth. In the former example, we had inflation due to an opec-induced cornering in the oil market together with a lack of central bank intervention. In the current example, we had deflation due to worldwide capacity increases and excessive central bank intervention.
Note the "Calls for Peace" mark the top prior to major stock market melt-downs 1973 & 2007.
Note the Peaks in 1973 and 2000 and 2007 were at times when the collective group of 50 or so hot stocks had a P/E of 50 in 1973's Nifty Fifty, then in 2001 the PSR (Price to Sales Ratio) reached well beyond 50 preceding a crash, then the P/E of a house reached beyond 50 prior to the Gov't cutting the leverage down in banks to reduce lending to an overpriced asset (real estate).
Note the "internal trend" that has paced along this whole time, but also keep in mind that it isn't adjusted for inflation since it is a "nominal" price and not a "real price". One share of the S&P500 might buy 2 ounces of gold now, but that isn't always the case. It changes around a lot. How much land does 1 share of S&P500 buy? These are the important questions in the long haul, what does your one share of the S&P500 buy? What is the dividend income from that one share? And what does one share earn?
There are many more stories in this long term chart pattern that I would love to share. Feel free to comment below or ask questions.
Best regards,
Tim West
12:00AM February 24, 2017
Catatan
1974-1994 COPY & PASTE to the 2009 low
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