Author: mungofitch

Subject: Re: 115 years illustration of secular bulls and

Date: 1/6/2019

Recommendations: 11

Here`s a chart of gSPY adjusted for inflation. This includes dividends. In such a long data series the growth seems inexorable. But those little squiggles can be quite something to live through! Zero real total return from 2000-03-24 to 2013-05-08. Maybe the March 2000 peak was a little anomalous for the S&P 500, but you get similarly long stretches at other levels. e.g., Zero real total return from 1998-02-18 to 2011-08-08. The latter was a "minor" bottom. Speaking of returns from an index... FWIW, I note that the Nasdaq 100 Equal Weight index is quite a bit cheaper than usual these days using trailing earnings yields as a yardstick. The median firm is 16% cheaper than average since 1997, the average firm 26% cheaper than usual. On a median day since 1997, the median earnings yield was 3.91% (P/E 25.6), or 4.24% (P/E 23.6) starting 2003 after the tech bubble was bust. Right now it`s 5.22% (P/E 19.1). On that metric, it has been cheaper only 15% of the time since 1997 or 20% of the time since 2003. Looked at on a relative basis, it also looks good. The earnings growth rate has been reliably much higher in the Nas100 than among the S&P 500 since the tech crunch, so they should rationally trade at a solid premium. Again, based on median trailing earnings yield: Usually the Nas 100 firms are ~30% more expensive than the S&P 500 ones on trailing earnings yield, but right now it`s a premium of only 10%. If somebody held a guy to my head and said I had to be long an index fund, it would probably be QQQE at $41.52. Jim