The stock market’s volatility has pushed the S&P 500’s price up nearly 100% in the past decade, making it one of the most volatile markets in the world.
And despite its current bull market, the S &M sector is still struggling to recover from the Great Recession.
But how much does stock price growth need to happen to see investors’ returns go up?
According to analysts at Bespoke Investment Group, a firm that specializes in tracking the S, M, and ETF sectors, stock prices are a very poor proxy for the market’s actual value.
Bespokes’ CEO, Jeff Fiedler, told CNBC that it’s not clear whether the S and M market is going to be able to reach a new record high anytime soon.
“There’s some uncertainty about whether it can get there, but we think it’s a very low bar for us to really get to the question of whether this is the year,” Fiedling said.
“For investors, that means looking at the total return versus the stock market in terms of total returns.”
Bespoke’s analysis shows that the S.M.S. and S&amt S&s ETFs, which are typically the most stable, are outperforming the S-curve over the past two years, even though they haven’t returned any more than 5% per year.
The S&ams ETF is currently trading at about $9 per share, a value that would be a record for the S stocks ETF, according to Bespokers.
In the case of the S ETF, that translates to a return of about 8.5% per annum, which is a new high for the ETF in two decades.
“This S&m is not going to beat its S&p or its Dow Jones Industrial Average in any meaningful way,” Fieldler said.
But there’s another factor that makes stock prices a poor proxy: The market’s current valuation.
The average stock price of an S&ing stock is about 30 times its current market value.
That’s a much lower valuation than the S markets, which have historically had higher valuations than S&amas.
And Bespoked believes that investors should expect the S to have its price rise in the future.
“You can imagine that, at some point, the market will go to $1,000,” Fieler said.
“So investors will say ‘well, we’ve got a way to go to get back to $10,000.'”
The S&adt ETF, on the other hand, has an estimated market value of $10 billion, which would be an astounding return for the index.
“The S &amt ETF is actually a great example of how to build a sustainable long-term growth portfolio,” Fierler said, pointing to the S index as an example of a well-built, long-duration, long market.
“It’s actually a portfolio that will grow for a long time,” he said.