S&P 500 down at least 6 percent since Joe Biden took office

by philg

Not a great time for us buy-and-hold index investors….

Since Joe Biden took office, the S&P 500 is down at least 6 percent in real terms (up 3.9 percent nominal, but up is the new down in a high-inflation environment).

Who wants to get bragging rights by calling the bottom on this market slide? I’m going to say that the correct value is 3,200 (pre-coronapanic value) plus 0 percent growth for 2020 when Americans cowered in place and 8 percent growth for 2021. Then add 20 percent for the inflation rate that is experienced by people with enough money to buy stock. So today’s correct nominal value is 4,096. Markets tend to overshoot, though, so let’s take 5 percent off that for the bottom: 3,891.

14 thoughts on “S&P 500 down at least 6 percent since Joe Biden took office”

  1. As a fellow buy and hold index investor, isn’t now a great time to continue the strategy based on the assumption that now is not the knee of some uniquely catastrophic time in equity investing?

    Isn’t the point that times like these work themselves out towards the grand average given sufficient time?

  2. Not a great time for us buy-and-hold index investors…. Does this include the dividends paid out over the year?

    • For all of the talk of bitcoin as an inflation hedge and a value store alternative to USD, everyone I know that is into bitcoin is into it for speculation and retail trading. If most of the bitcoin market is speculation and retail trading, then I’d expect it to crash right alongside NASDAQ.

  4. Doug Kass called for 3200. The lion kingdom suspects wherever it bottoms out, it’ll regain the 2022 peak a lot faster than the 10 years it took to regain the 2000 peak. The last 15 year bull market was nowhere close to the exuberance we had in 2000. There’s the chance the era of quantitative easing will go down as a failure & we’ll go back to 2009. It’s more likely the government will fudge inflation back to 0 without nearly the tightening feared.

  5. My bet is on overcorrecting not only for the COVID bubble, but also much of the QE bubble that’s been expanding since 2008. I predict a bottom out at 2700.

  6. S&P is hard to predict for me. I’d put the correct valuation for the Nasdaq Composite index at 6000, which would be roughly half the current price. In the 2000 bubble, it went from 5000 to 1280, so the drop wouldn’t be quite as severe as back then.

  7. I’ve been in the Market since the 70s. It simply doesn’t matter at all who the President is. I’ve been successful and destroyed by both parties. I wish it was that simple. I’d simply invest more when the President from the “right” party is in office.

    • Jim, presidency would not matter much under free market. Maybe it did not matter before. US President and his administration matter when businesses are over – regulated to the point that when executive power – FDA – randomly decides to keep a baby formula production plant closed there is no new competition to rise and fill the gap on store shelves. Big baby formula, awaiting decision of Democrat Politburo in US Congress who decided to meet on it in 2 weeks. It is something the can be easily made by mom and pop food businesses. So it does matter. If this continues that it will indeed not matter who is US President again – but only because economy will be equally bad al the time.

    • perplexed: It is interesting that Jim thinks that there is no connection between the money printing (e.g., the $1.9 trillion supplementary spending that started in March 2021; see https://www.cbsnews.com/news/biden-signs-covid-relief-bill-american-rescue-plan-into-law/ ) and the stock market. If Jim is correct, we shouldn’t limit government spending to $6 or 7 trillion per year or whatever Joe Biden and Congress have expanded it to. Imagine all of the great things that the government could do with $10 trillion per year to spend.

    • Philip, it were just money printing… I had seen some arbitrage opportunity I geographically close areas food service mis-pricing and wanted to create my own food service business… Entry barrier was too way to steep for me, all who new the industry did not want to get involved because of different level of regulations.
      Sometimes I think that Russia is posed to outlast the West in current conflict because Russian small-scale economy is closer following free market model and is more resilient then over-regulated Western economies that started following economic model that earlier brought down USSR. Hope I am wrong on this.

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