S&P 500 May Have Another 24% to Fall, 150 Years of Market History Shows

[mahatmakanejeeves]

Or it may not.

Bloomberg

S&P 500 May Have Another 24% to Fall, 150 Years of Market History Shows

Isabelle Lee
Thu, June 23, 2022, 4:43 PM

(Bloomberg) -- The S&P 500 Index may have another 24% to fall by year-end, if the past 150 years of financial-market history are any guide.

{snip}

That’s according to Societe Generale, which calculates the benchmark gauge may need to tumble as much as 40% from its January peak in the next six months to hit bottom. That comes out to 2,900. The upper end of the range the firm gave is for the index to slump by roughly 34% from its top, to 3,150. ... Societe Generale arrived at this range by studying post-crisis market valuations starting in the 1870s, using quantitative analysis, as opposed to factors such as earnings projections and valuations.

“The current market valuation clearly stands as a bubble vis a vis the valuation reset of March 2020 and its trajectory,” quant strategists including Solomon Tadesse wrote in a research note Thursday. “The dynamics of post-crisis fair value still call for a deeper correction to bring current prices in line with the reset anchor fundamental fair value.”

The firm computed 3,020 as fair value for the S&P 500, in line with its historical post-crisis market valuation trendline. The index gained about 1% on Thursday to 3,796, after Federal Reserve Chair Jerome Powell said in House testimony that his commitment to bring down price increases is “unconditional.” The S&P 500 has tumbled about 20% this year amid building recession worries as the Fed has boosted borrowing costs to combat inflation.

{snip}

[bucolic_frolic]

1. Would equate to Dow 23,000 roughly

I think a year ago, Hedge Funder Bill Miller opined on Dow 17,500 in a WealthTrack interview, but do your own corroboration unless you want to rely on my memory. Miller also said he had ALL of his personal investments in AMZN, which has taken a tumble of tumbles.

[PoindexterOglethorpe]

2. Why any supposedly sane investor would have ALL of his personal investments

in just one stock is unfathomable. I would definitely take any advice from him.

Diversify is the essential rule.

Here's a quiz for you:

In the past 95 years,

How many years did the stock market have big loss, 12% or more?

How many years with a small loss, 0% to 12%?

How many with a small gain .1% to 11.9%?

How many with large gain, 12% or more?

Think about it, don't research it, but give your answers. You'll be VERY surprised at what the actual answers are (unless you already happen to know them).

Also, remember there was a 10,000 point drop in the Dow in February-March 2020, but it was all regained by the end of that year.