My partner Cory Venable’s big picture snapshot of the S&P 500 Index since 1997 (below) highlights the prior cycle peaks in 2000 and 2007 and the breathtaking parabolic move since 2020. Remember that this is one of the most widely tracked stock indices by countless mutual funds and exchange-traded funds and is considered a core holding and relatively ‘conservative’ allocation target for ‘buy and hold’ individual portfolios and pensions alike.
Now understand that the most historically informed base case from presently extreme levels of valuation and price-indiscriminate ownership for the S&P 500 is a 65% decline (highlighted with arrows), followed by many years and possibly decades (as with Japan’s Nikkei when its bubble burst in 1989) waiting to recover the recent peak. Few of the present equity holders will hold on long enough to grow back their losses.
Financial analyst and fund-flow expert Mike Green explains some of the systemic implications for passive allocators and products in the segment below.
Portfolio Manager and financial analyst Mike Green explains The Myth About Passive Investing in this recent discussion with Danielle DiMartino Booth. Here is a direct video link.
;
