Hey all,
I've been wondering about how the S&P500 has performed since the Pandemic began in real terms (adjusted for inflation). I find it quite fascinating that we endured one of the hottest bull markets in history between Q2-2020 and Q4-2021, and yet indexes are only marginally higher than they were in Q1-2020.
I hadn't seen much data posted on inflation-adjusted returns so I've compiled them here for your commentary. All numbers are USD and are using US inflation data based on CPI data.
- CPI Aug 2022: 123.1
- CPI FEB 2020: 108.6
- Change: 123.1/108.6 = 1.1335X
S&P500:
- S&P500 Today: 3758
- S&P500 Feb 2020 High: 3390
- Change: 3758/3390 = 1.108X
Today's inflation-adjusted S&P500 price 3390 on Feb 2020 (Pre-COVID high): 3842.5
So on a real basis, we are trading ~2.2% below pre-Pandemic levels. This is a 31-month return of -2.2% in real terms (-0.85% APR). Nominally, we are up about 10.8% from the pre-Pandemic highs (4.18% APR).
NASDAQ:
- NASDAQ Composite Today: 11066
- NASDAQ Composite Feb 2020 High: 9750
- Change: 11066/9750 = 1.134X
The Nasdaq has returned very close to 0% since pre-Pandemic highs, adjusted for inflation. It has tracked CPI nearly 1-1 over the past 31 months.
Some thoughts and takeaways. 2020-21 felt like the second coming of the '99 Tech Bubble. Software companies were getting 100X+ Price-Sales valuations. Work-from-home was supposed to have advanced the technology sector by 5-10 years in the span of one. Companies like Zoom hit $100B+ valuations.
It's quite astonishing how quickly everything went from bust to boom to bust again. One year ago, it would be hard to fathom how the stock market could be down (inflation-adjusted) since pre-Pandemic levels. After all, we were still in the midst of a face-ripping bull market. It's quite sobering to see how quickly returns can vanish and even go well-below historic averages.
Throwing all your money into the stock market in Feb 2020 would have yielded a below-average nominal return, and a negative real return. Thoughts/commentary?
Submitted September 23, 2022 at 01:06AM by chuck_portis https://ift.tt/wck15RS
