The Back to the (Stock Market) Future

It seems that when journalists can’t think of anything else to say about the latest slaughter on Wall Street they point out that the stock market is now back to where it was X years ago. It’s not a meaningless comparison.

On Friday the S&P 500 closed at 683.38, up 0.12% over the close the day before. Prior to Thursday, the last time the S&P closed at that level was September 20, 1996. Old guys like me think that was just yesterday, but it was actually rather a while ago. Clinton (the husband) was running for reelection. The internet stock craze was just beginning. Steve Jobs hadn’t returned to Apple yet and Amazon and eBay were both still privately held.

Does it make sense that the 500 largest companies in America are now worth what they were 12 1/2 years ago?

Of course, simple price level is not the only way to judge what stocks cost. Consider price earnings ratio (PE), what you pay per dollar of corporate profits. What the S&P 500 companies will probably earn in 2009 turns out to be roughly comparable to what they earned in 1996. But that’s not apples to apples, because in 1996 the economy was humming along in a boom and today the economy is in recession. (We hope.) To normalize the cyclicality out and get a handle on the gross earnings power of the S&P 500, Yale’s Robert Shiller has popularized PE10, which is the ratio of price to the average earnings over the previous ten years. Plug in Friday’s close to his spreadsheet and you get a value of 11.8. The last time we saw 11.8 was in January 1986.

Other valuation measures point to the middle of the Reagan years. The last time that the S&P 500 had a dividend yield as high as it currently has, according to Shiller’s spreadsheet, was October 1985. And best I can make out from this chart the last time the price/book ratio of the index was this low was 1986. So based on what you get for your money in terms of long-term earnings power, dividend yield, and book value, the market is trading at 1986 prices.

One more historical comparison worth pondering: the dividend yield on the S&P 500 is now safely above the yield on 30-year Treasury bonds. The last time that happened? August of 1958.

It takes a lot of nerve to say it out loud, but all these comparisons imply that the stock market is cheap now. The economy grew quite nicely in the last 12 1/2 years and our biggest companies are larger and more profitable. It’s hard to justify that they have not appreciated in value at all.

The market in 1986 may not have seemed so cheap to those working there at the time (I was in college) but it sure seemed like a screaming bargain in hindsight, at least until very recently. Using a time machine to travel back to the mid-80’s was a recurring fantasy of many stock market investors. (Probably still is, come to think of it.)

And I used to amaze my professional colleagues with the fact that the dividend yield had ever been higher than the long bond yield.

Of course, saying the market is cheap is different from saying you should hurry up and buy in. Just because it is cheap today does not mean that it cannot become cheaper tomorrow. But is it cheap today.

Investing, Robert Shiller | Frank Curmudgeon | March 9, 2009 6:00 am

13 Comments

By Doups, May 18, 2023 @ 12:20 pm

Hey there! Doubledown casino is a great game and if you are looking for Doubledown Casino promo codes to collect some extra Doubledown casino free chips then look no further! We share Doubledown promo codes each day. There are two ways to get more Doubledown casino free chips. One is to collect free promo codes from our website Giftseize. Hey there! Doubledown casino is a great game and if you are looking for Doubledown Casino promo codes to collect some extra Doubledown casino free chips then look no further! We share Doubledown promo codes each day. There are two ways to get more Doubledown casino free chips. One is to collect free promo codes from our website Giftseize. Casino games are always great when you want to chill and invest some virtual currency so you can get that sweet dopamine response. DoubleDown Casino is one of those games. Here, you can enjoy dozens of different games that have a very realistic setting, similar to a real Vegas strip! You have to use chips to make your bets and play the games, but sometimes your chips might run out.
http://www.ysca.kr/bbs/board.php?bo_table=free&wr_id=31938
Wanna learn how to play free poker texas holdem, but don’t want to embaress yourself in front of your friends on poker night? Let us finally answer some of the most frequently asked questions that new online poker players may have when they opt to start playing poker online for the very first time. You will also find a lot of frequently asked questions answered on our listed top 10 real money poker sites websites so if any questions you may have are not answered here simply take a look at our listed poker sites websites for the answers will often be found there! BetOnline Poker was formally a member of the Chico Poker Network, until 2016 when they launched their proprietor poker client.— it’s because of this development that poker players in the United States can enjoy one of the most seamless poker gaming experiences today. The client is fantastic, enabling you to have fast access to what the majority of players see as soft games.
By Seplzx, October 25, 2023 @ 9:07 am

Edward SCSQtKOmPZD 6 26 2022 priligy india
By purchase, July 4, 2024 @ 5:55 am

purchase provigil
By medication, July 4, 2024 @ 12:59 pm

can i buy diflucan without a prescription
By Joync, July 13, 2024 @ 7:00 pm

In case you’ve been wondering, how long does Goodwin take to pay out?, hopefully, we’ve made all of that more transparent today. Say you’d wish to learn more about Goodwin, have no hesitation to read our additional overviews. Right now, down below are a few quick data points to sum up the casino’s withdrawal procedure. Our moderators will take a look at your suggestions and verify the information before updating The internet casino site had its first users signing up in . From that time on, the number of online slot machines available has arrived to a point of 2000 individual releases. Pending Time: 24 hours 200% up to €1000 + 10% Cashback Pending Time: 24 hours The internet casino site had its first users signing up in . From that time on, the number of online slot machines available has arrived to a point of 2000 individual releases.
https://www.bsleadership.org/forum/general-discussions/bingo-plus-free-40
For just $1 deposit, you’ll get 40 Free Spins at Ruby Fortune Casino, to be used on the epic Queen of Alexandria online pokie. Ruby Fortune is also a Baytree (Alderney) Limited brand. This means that similar to its sister sites, this casino runs on Microgaming software and has a 50x play-through requirement for their bonuses.If you wish to deposit $5 more, you get up to 100 extra spins on your account. A decent Roo Time Gaming Casino. The bonuses seem a little better than the others that are like it. With the free $25 chip offered I was able to play on it another longer than most other RTG casinos. It seems most casinos have lowered the max cashout on free bonuses to $50. IT was not long ago when they allowed you to cashout $100 on them. Disappointing.
By sale, July 16, 2024 @ 4:16 pm

can you buy diflucan otc
By cheap, July 16, 2024 @ 11:25 pm

flomax 15 mg
By sale, July 29, 2024 @ 10:48 am

provigil mexico prescription
By tablets, July 29, 2024 @ 7:21 pm

purchase clomid online uk
By anner, July 30, 2024 @ 10:12 am

The parties to Ambev Shareholders’ Agreement are IIBV and AmBrew, which represent AB Inbev’s beneficial interest in Ambev, and Fundação Zerrener, as well as Ambev, as intervening party, and AB Inbev, as intervening third-party beneficiary. Among other matters, Ambev Shareholders’ Agreement governs the voting of Ambev common shares subject to the agreement and the voting by Ambev of the shares of its majority-owned subsidiaries. This latest addition to AB InBev’s crate family is 100% recyclable, allowing the beer brand to switch from a linear to a circular plastic waste stream. Please fill out the form below and click “Place Order” to complete your order. Fundação Zerrener’s mission is to provide mainly medical, hospital and educational assistance to employees and dependants of its sponsor – initially Companhia Antarctica Paulista and, since 1999, Ambev and its controlled companies based in Brazil. The Foundation acts for this cause since September 1936, with support from the endowment left by the couple Helena Mathilde Ida Emma Zerrenner and João Carlos Antonio Frederico Zerrenner, who was one of the founders of the old Companhia Antarctica Paulista, succeeded by Ambev.
https://zanesgqz077604.blogsvila.com/26806893/internet-of-everything-stocks
Governance 19.2Governance evaluates a company’s overall mission, engagement around its social environmental impact, ethics, and transparency. This section also evaluates the ability of a company to protect their mission and formally consider stakeholders in decision making through their corporate structure (e.g. benefit corporation) or corporate governing documents. ESG stands for Environmental, Social, and Governance and is a list of criteria utilised by fund managers to measure the ethical impact of companies that they are considering for inclusion in ethical funds. When measuring a company’s ethical impact, fund managers will take into consideration factors such as the amount of waste a company produces, the amount of energy it uses, measures to tackle race and gender inequality, investments in local communities, shareholder rights, and how transparent it is with its public reporting.
By anner, July 30, 2024 @ 9:44 pm

While a news source may come from a reliable database, it is still important to critically evaluate the content. Peer-review and other forms of checks and balances make it more difficult for false information to get through, but these are not perfect systems. The 2016 presidential election brought the issue of fake news further into the spotlight than ever before. For additional tips on determining the authenticity of news sources, see the video and links below. But, the immense variety of information and research made available to us leads us to the question, how do I know if the information I am sourcing is reliable? The crux, according to his words, is that PSG never had a firm stance on the deal, and he reported only what was supplied to him by his sources in the club. By making the political leanings of hundreds of media outlets transparent, AllSides allows you to consume a balanced news diet and avoid manipulation and fake news.
https://www.syslynx.com/forum/general-discussions/paid-promotion-twitter
Unlike Pinterest, Pearltrees makes use of the terms pearls & trees in place of pins and boards of Pinterest and allow users to follow their favorite trees, pearl their favorite contents to the trees and follow overall similar but a slightly different concept to Pinterest. If the concept of Pinterest seems neat to you, but the website itself isn’t quite your cup of tea, that’s perfectly okay. Inspired by Pinterest’s unprecedented success, there are now plenty of other lookalike websites out there on the Internet, some of which are direct copycats, and others which do things a little bit differently. Yes, there are several apps like Pinterest available. Some of the best apps similar to Pinterest include Pearltrees, Dribbble, Hometalk, Juxtapost, Behance, and Tumblr. These apps offer similar functionalities and allow users to save and organize content in various categories.
By anner, August 4, 2024 @ 9:20 am

Sidewalk chalk can be used to create endless outdoor games for kids, from hopscotch and bullseye to checkers and four-square. O’Connor L. Implications for Learners-Dyspraxia. The warm weather is here! It’s time to make up for the long cold winter where we spent way too much time inside. We needed some ridiculously fun games for kids! The warm weather is here! It’s time to make up for the long cold winter where we spent way too much time inside. We needed some ridiculously fun games for kids! This is an oldie (as in kids have been playing it for over 300 years) but a definite goodie. The object of the game is simple and kids can either draw their own course with the chalk or have a parent help. Use your imagination and draw the boxes to be jumped in in various colours and shapes. Use the chalk as the marker or find stones, beanbags, or small plastic toys. Once your children have conquered hopping the course, see if they can double hop on each box or use varying feet for hopping on the way up and the way back.
https://page-wiki.win/index.php?title=My_mind_playing_tricks_on_me
Jets games can be heard on ESPN Radio 98.7 in the New York area. 2007 – 2023 FreeGamePick™ All Rights Reserved My little pony games Play a realistic FPS sniper game like Sniper In The World. Because of its 3D graphics, this game will provide you with a gaming experience unlike any other…. Anyone with a passion for flight has likely played one or more of the Ace Combat games. The team at Bandai Namco has done everything they can to make each entry to the series feel and look as realistic as possible, despite adding in a more arcade style of combat to the game. The latest entry, Ace Combat 7: Skies Unknown, features VR support, allowing flight enthusiasts to feel as though they’ve truly stepped into the cockpit as they control one of 28 different aircraft.