In this weekend’s Barron’s, one Wall Street strategist predicts the S&P 500 index funds will tumble by Christmas.
However, another says the index will continue to run this year —but it will lose money over the next decade.
Some other interesting data points:
The index has returned 376% over the past decade (2011 – 2021), or close to 17% a year
Active management has trailed over these same 10 years by an average of 2.5% a year
5 companies— Apple, Microsoft, Alphabet, Amazon.com, and Facebook —combined for one-quarter of the S&P 500’s market value
BofA says one measure has predicted about 80% of 10-year returns for the S&P 500 since 1987: the ratio of the index’s price to what the bank calls its normalized earnings for the past 12 months. A typical reading is 19. The latest is 29. That has nudged the model’s predicted 10-year return below zero for the first time since 1999. (The bank is predicting a 10-year average loss in the index of 0.8% a year)
The SPY closed at $445.44. It will be interesting to check in 10 years (9/12/2031) where the index sits.
