2020_04_12 — “Time for YOU to Predict the Future”

Time for YOU to Predict the Future

SUMMARY

  • It’s a holiday week; therefore, I want YOU (not me) to determine what will be
  • — — — Where will the S&P 500 be in several years?
  • What does that mean in terms of annual returns with and without dividends?
  • — — — Since 1931, the S&P 500 price index has compounded at 6.83% per year
  • — — — Since 1931, the S&P 500 with dividends reinvested has compounded at 10.67% per year
  • If the S&P 500 price index reclaims its February high in five years, that will equate to a 6% annual return with dividends reinvested, which is a pretty good return in a zero percent world
  • Predicting what markets may look like, can help you set expectations and comfort levels

DETAILS

  • The past: The S&P 500 recently reached an all-time high closing level of 3,386.15 on February 19, 2020
  • — — — The S&P 500 also recently reached a 29-month low closing level of 2,237.40 on March 23, 2020 (a level not seen since December 2016)
  • The present: The S&P 500 closed Thursday, April 9, 2020, at 2,789.82
  • The difference: There is a 596.33 point difference between the recent high level and the market close on April 9
  • — — — Thus, the S&P 500 is 17.61% (596.33 / 3,386.15) below its all-time high; however, because percentages work in funny ways, the S&P 500 must rise by 21.38% (596.33 / 2,789.82) to match its old high level
Source: Bloomberg terminal, Total Return Analysis (TRA) function
Source: Bloomberg terminal, Total Return Analysis (TRA) function
Circled data is for example purposes only, and not meant to guide or influence your choice.
Circled data is for example purposes only, and not meant to guide or influence your choice.

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Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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Michael Ashley Schulman

Michael Ashley Schulman

Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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