The S&P 500 Index [SPX] has gone up 16 of the last 18 weeks, an increase of 24.77% over that time. Apparently, the last time the Index finished an 18-week stretch featuring 16 ‘up’ weeks was March 19, 1971, an increase of 21.16%.
SPX is closing at record highs routinely these days.
But is your account value at an all-time high? I know mine isn’t.
Unless you’re passively invested in an index ETF that mirrors SPX, chances are your account value is underperforming the market. But what actually represents the market? SPX is dominated by the outperformance of the ‘Magnificent Seven’ [AAPL, AMZN, GOOG/GOOGL, META, MSFT, NVDA, TSLA] and more recently, by just the middle ‘Fabulous’ five tickers as even AAPL and TSLA have not performed well year to date. I consider SPX to be a poor representation of the entire stock market, because it is too tech heavy, and it is only getting worse. But I didn’t set out to espouse the virtues of investing in these massive companies because there are numerous articles out there doing just that.
Really, I am only writing in an attempt to distract myself from eating too much before I go to bed. But let me finish my thought.
Below is a snapshot of SPXEW, the equally weighted version of the S&P 500 Index, from January 5, 2022 through March 1, 2024.
This equally weighted index has also had a great run recently, but it is still 1% short of its all-time high. Now, if someone had told me on January 5, 2022, that SPXEW would spend the next 26 months trying to get back to its all-time high I would have said “that figures” or “of course”. My expectations are usually pessimistic and contrarian. I believe that regression to the mean is a powerful force and eventually my portfolio’s performance will pick up and the Ai craze and the massive multi-trillion-dollar companies will correct. So, you see? I can be optimistic, and my optimism is directly correlated to the disappointment of others. Make no mistake, there are people that will buy heaps of Nvidia [NVDA] this week and there is a real probability that their position will have the same value in 25 years.
Let’s not forget about Cisco Systems Inc [CSCO], a great company that has actually lived up to its hype.
If you’re one of the poor bastards who bought CSCO 25 years ago when it was trading in the $70s or <shutters> over $80, you’re still not back to scratch even if you’ve been reinvesting the dividend that it eventually began paying. And let’s face it, most would have exited their position long before it dropped below $10 three years later.
In other words, the charts above help me feel better about the mediocre performance of my own investments and maybe it will help you feel better too. I don’t want no mediocre no, but it just might mean better days lie ahead.