Let's check in on inflation protected securities

 VIPSX, nominal return

Inception 6/29/2000 to August 31, 2023: 4.43% per annum

 

SPX, average nominal return, dividends fully reinvested

June 2000 through August 2023: 6.90% per annum (4.93% without dividend reinvestment)

 

It's been 23 years of not a bull market

 Average real return per annum from $SPX, dividends fully reinvested:

August 2000 to August 2023:  4.23%

August 1977 to August 2000: 11.35%

 

I've seen a bull market . . . A bull market was a friend of mine . . .

 

The difference between then and now is like night and day

 

Total bond market index for long term investors vs. S&P 500

Return for VBMFX, Vanguard's Total Bond Market Index Fund, investor shares, closed to new investors, inception December 1986-December 2022 per annum:

5.08%.

Return for S&P 500, average nominal, dividends fully reinvested, December 1986-December 2022 per annum:

10.28%.

Long-term investment grade bonds for long term investors vs. the S&P 500

Return for VWESX, Vanguard's Long-Term Investment Grade Bond Fund, inception July 1973-December 2022:

7.48%.

Return for S&P 500, average nominal, dividends fully reinvested, July 1973-December 2022:

10.61%.

The Great Long Term Investment Grade Bond Debacle of 2022

Safe havens aren't supposed to do this.

Long term return for VWESX since inception in 1973 near the end of 2018 reached north of 8%.

In 2022 ytd return is -27.28%.

The whole spectrum of bonds as represented by VBTLX is down ytd 14.79%.

Traditional investors with a 60/40 portfolio are down over 20% through yesterday because stocks and bonds both are falling.

Cash is king again.

 

Look out below: The 10-yr minus the 2-yr is now lower than at the Aug 2000 market top and 0.01 away from the Mar 2000 level of -0.47

 

Real return since August 2000 has been Great Depression-like

 

The investing world's experts, let alone all the sheeple who follow them, don't have a CLUE how bad this market has been since August 2000

 The TOP, do you hear me, was in already last November.

As of May 2022 real return has pulled back all the way to 4.14%.

We truly live in a new period of suck.

 

 

How low could the S&P 500 possibly fall from the Monday, Jan 3, 2022 closing high of 4,796.56?

 Some are calling this a dot-com-like bubble "burst". 

Jeremy Grantham thinks a 40% decline is in the offing.

That burst happened gradually, actually, from August 2000 to February 2003, more like an old balloon slowly deflating in the corner of the room under a table months after the party had ended.

On an average basis, the S&P 500 fell from 2471.50 in August 2000 to 1314.31 in February 2003, in March 2022 dollars. That 1157.19 point drop amounted to a drop of 46.82%.

Before climbing to the spectacular heights we know today, the S&P 500 had another appointment with more bad news, unfortunately, in March 2009, achieving an even lower level than February 2003.

In March 2022 dollars, the S&P 500 bottomed in March 2009, again on an average basis, at 1023.36. That was 1448.14 points from 2471.50 in August 2000, a drop of 58.59%.

That was quite a long process, a very bad, no good, rotten almost a decade for stocks. Real per annum return August 2000 through March 2009 averaged  -8.14%.

Many children watched their parents lose everything, including the house.

Those February 2003 and March 2009 type of events must be recognized as within the realm of real possibility even today.

4796.56 minus 46.82% would put the S&P 500 at 2551.

Minus 58.59% . . . 1986. 

Not saying it will happen. Not saying it's even probable. Just possible, because it has happened before.

Smart investors are ready for the possible.

The index is down 18.19% from the all-time-high tonight.

 

The biggest investing lie of our times: "A host of factors ... has made U.S. equities an attractive place to park money and earn nice returns"

 CNBC, here.

S&P 500, average real return per annum, dividends fully reinvested:

August 2000 through April 2022, 21 years, 8 months . . . 4.6%;

The 21 years, 8 months previous to that, December 1978 through August 2000 . . . 12.35%. 

At 4.6% it takes about 15.5 years to double your money, at 12.35% just under 6 years, which means under current circumstances you haven't yet doubled your money twice, whereas previously you would have doubled it 3.6 times.

The stellar real returns to the August 2000 top have been cut down since then from 12.35% to 8.41%. How long will it be before they are cut back to 6.44%, the long term real return from January 1871 to December 1978?

The odds are not very long.

Those stellar returns of the second half of the 20th century are an artifact of The Great Depression lows. To achieve them again will require another one.

Safety check, Vern.

Stonks have really sucked for the last 21.5 years

Average per annum return of 4.77% has been 26% off the long term historical return from 1871 and over 61% off the immediately preceding 21.5 years beginning in February 1979. The Great Reagan Bull didn't even begin until 1982.

The secular bear continues.

 

The 20th anniversary of the end of the Reagan bull in August 2000 shows stock market return hasn't been just sub-bull, it's been sub-normal

Average per annum real return from the S&P 500 in the last 20 years has underperformed the 100+ years up to the beginning of the Reagan era by 36.8%.

Don't even begin to THINK return has compared with the era of the Reagan bull. This isn't a bull market, let alone a normally performing market.

Remember, this is real return, not nominal. 

 

Stonks continue to SUCK since August 2000: July 2020 edition

Meanwhile the secular bear market in stocks since August 2000 rolls on in April 2020

Return in the last 19.6 years lags the previous period of equal length by 75%, and lags long term return before that by 52%. 

Trump can crow all he wants about new stock market highs: Real return continues to lag the previous era by over 70%

More gaslighting: Trump's greatest economy ever is now in its 222nd month of a secular bear market

“No one had the economy that we do. We have the greatest economy that we’ve ever had.”

The current secular bear market in stocks matched the length of the Reagan secular bull in September 2018

Average investors since August 2000 have underperformed the great Reagan secular bull market by nearly 70% annually through September 2018, but the current secular bear marches on.

Average investors aren't just severely underperforming the Reagan bull, however. The average 5.77% per annum return since August 2000 also underperforms the S&P 500 annually from 1871-1982 . . .  by 29%.

When the current secular bear ends is anyone's guess. While already long in the tooth, there's nothing that says it can't last even longer.

But you'll know it's over when stocks are universally shunned, as they were in the summer of 1982. Unfortunately, that would mean the S&P 500 would have to fall, and fall hard and deep, from here. In a worst case scenario that would mean to a level of, say, 283, which is today's inflation-adjusted level of the S&P 500 in July 1982, 89.6% south of yesterday's close at 2728. That's what it would take to match that buying opportunity, not just of a lifetime but of the whole history of the S&P 500.

On an inflation-adjusted basis a more likely future washout range would include a level something well north of 283, however, say between December 1987 at 527 and March 2009 at 898. The feeling has always been that the catastrophe of 2009 was arrested by draconian interventions, and that the market wasn't allowed to do its work and destroy the weak as it should have.

The Reagan secular bull was an extreme outlier in the history of the market. Nemesis is still lurking out there somewhere in its relentless quest to revert to the mean. Best not to stand in its way. 

The secular Reagan stock market was 3.6 times better than this one (through April 2018)