1929-1945
1969-1982
2000-2011
What are these dates and what do they have in common?
These are all time periods when the stock market returned zero or less…
In the most recent period, the S&P 500 experienced negative returns for several years during this period due to the bursting of the dot-com bubble (2000-2002) and the subsequent economic impact of events like 9/11 and the 2008 financial crisis. In fact, the total return between 2000 and 2011 was -13.88%.
Market breadth is looking sickly. Market concentration is very high… PE ratios are high also.
Many talk about diversification and how if you buy the S&P 500 you are diversified.
How diversified is it really.
1.8% (9 stocks) of the 500 stocks account for 36.5% of the index weight.
S&P Index PE is 29.85. Let’s round up and say PE is 30. How long a payback period do you have? At the current earnings rate, 30 X 4 = 120 quarters … that is a long time.
How is this diversified? Asking for a friend…
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