During four months in 2021, real return since August 2000 briefly hit the 5s: 5.06% in August, 5.02% in September, 5.17% in November, and 5.15% in December.
Real return swooned after that, as low as 3.63% in October 2022, making it seem like 2021 might have been a secular turning point.
But by October 2024 real return since August 2000 had recovered to 5.11%, and 5.2% in November, and 5.24% in December.
Is this the new secular peak?
Return might suggest, No, seeing how low it still is.
Valuation might suggest, Yes.
The annual average of the S&P 500 divided by GDP in trillions hit 186 in 2024, a level not seen since 1930 (228) on an annualized basis.
That ratio never got above 139 (2000) between 1937 (165) and 2020 (151).
And this ratio was 180 in 2021, 158 in 2022, and 155 in 2023, all unprecedented for the post-war.
But 186 in 2024 really takes the cake.
The price of the market is really, really rich for the return you get.
