Posted on 01/02/2020 1:20:44 PM PST by SeekAndFind
Stocks are lurching toward fresh records to commence the first trading day in 2020, but that advance has raised some questions about the run-up in values for broad-market U.S. equity benchmarks.
Indeed, the S&P 500’s recent gains have taken it to its priciest level relative to its hourly cost for the average worker on record.
By that measure, Tuesday’s climb by the S&P 500 SPX, +0.84% to a peak at 3,250.04 would mean that the average employee, at an hourly wage of $28.29, would need to work 114.88 hours to buy a single unit of the index, representing one of the loftiest levels on record, according to data from FactSet and the U.S. Bureau of Labor Statistics.
Data from the Federal Reserve Bank of St. Louis estimates that the average worker needed to work a record 109.75 hours, based on its most recent employment data, as of Dec. 6 (see chart below):
A tweet by financial commentator Holger Zschaepitz, using the New Year’s Eve closing price for the S&P 500 at 3,230.78 and an hourly wage of about $25.71, drew more than 630 likes on Twitter as of midday Thursday, highlighting a record number of hours of 125.6392 for a share of the S&P 500.
(Excerpt) Read more at marketwatch.com ...
Yeah, you’re right about that. I just don’t want to lose ground.
> REmember in the old days when the economy and the stock market were related? <
I think bond yields play a big part here. Ten-year treasury notes are paying less than 2%. But let’s say they were paying 8%. In that case, more folks would be buying bonds. And less folks would be in the market to drive stock prices up.
Put away in the best possible fixed income investments 100% of just the 2019 net gains, get more conservative on a larger segment of the portfolio than you did last year and take some bigger risks on a smaller segment, standing pat on the best of the rest. The more conservative and greater risk questions does not exclude the use of index funds with either one.
Personally my recession expectations are for any time from now through 2021, but expecting it sooner rather than later if a Dim wins in November, and slightly sooner rather than later if the Dims hold the house. Beyond the election it is global macro economic, debt & financial figures that suggest current GDP growth with low inflation is not sustainable beyond next 18-20 months. Then a new recession, of ???? magnitude and it is that magnitude that the elections could affect.
Just my own “crystal ball”.
> How long would the average worker have to work to buy one share of Berkshire Hathaway? <
A better question: How long would the average worker have to work to buy one U.S. senator?
That graph is suspect.
I own zero stocks. Yet my portfolio in a 401(k) is over a million in stocks.
Yes. The Market is Fantastic!
Yet Orange Man Bad.
Hmm. Was this supposed to be a criticism?
"Times are rough. An average worker can't afford an S&P unit anymore".
As if the number of shares one buys regardless of price, actually means something.
“More vacations?”
That’s what I had in mind, more vacations with this extra money. However a new law my Ed Jones adviser said is in the works nixes this idea, as I may not withdraw it from the IRA.
I was to start mandatory withdrawals this year, however there is supposedly a new law where mandatory withdrawals will change from 70 1/2 to 72. If that’s the case, I’d be just stupid to take out money for an extra vacation.
I remember people being openly skeptical that it could ever get to 5000.
I expect to see 40 or 50K before I die
Literally no one cares what the professional hysterics are whining about today.
54% of workers have either pension or 401 k plans that are setting record growth raters.
THIS is what pisses of the professional whiners. They fact that more US Citizen then ever before have been liberated from the corrupt grasp of the US Democrat Fascists Party.
Straight up lie. https://www.atr.org/thanks-trump-median-household-income-highest-level-ever?amp Thanks to Trump, Median Household Income at Highest Level Ever
Signed into law on 12/20/19. Became effective yesterday.
New law: The Secure Act increases the age after which you must begin taking RMDs from 70 1/2 to 72. But this favorable development only applies to folks who reach 70 1/2 after 2019. So, if you turned 70 1/2 in 2019 or earlier, you’re unaffected. But if you will turn 70 1/2 in 2020 or later, you won’t need to start taking RMDs until after attaining age 72.
The economy is related to the market.
Stock purchases are predictive.
Stocks rise in price based on thoughts of increased earnings. There is of course uncontrolled euphoria by some but generally the rising market is an predictor of increased earnings and thus an improving economy
Isn’t that amazing?
“High stock market bad!”
Obviously redistribution is in order.
Jonathan Clements, former WSJ writer, has a great blog Humble Dollar. It may be time to listen to some advice.
https://humbledollar.com/2017/10/enough-already/
I do not shill for him!
The S&P500 (SPY) described is an ETF, not a stock per se. It is a composite of the 500 companies making up the S&P500, much like a mutual fund although the expense ratio is extremely low, 0.0945%. In essence you are buying the entire index as an electronically traded fund (no human decision involved).
Years ago I noticed that some mutual funds would brag that they beat the S&P 500 in 3 out of the past 5 years. It was the "gold standard" so to speak. Damn, why not just buy the S&P? You get the 500 stocks in one fell swoop and every financial broadcast will list the current amount along with the DOW. You just move the decimal point over one to get the approximate price. Today it closed at $324.87.
I started buying it in 2016 at $195. KAG
Just another divisive rich vs poor argument. 85% of stocks owned by US individuals are in retirement accounts. Sure, rich people have bigger retirement accounts than poor people. But many middle class people that have the option to invest, don’t. A very large portion of young people who have the option to invest in stock based retirement accounts either invest very little, or none at all. Almost 50% of Americans don’t own stocks, but that doesn’t mean they can’t afford them. You can’t force free people to buy stocks. Also, some stock funded retirement funds that support DEFINED BENEFIT PENSIONS, for cops, firefighters, teachers, etc, are not owned by individual retirees, but by institutions. Not only does the graph not appear to consider this, but it ignores stock ownership by other institutions like non-profits, insurance companies and banks. It also appears to ignore foreign investors, who own about 25% of our stocks.
You will not regret taking some of your gains and locking in the profit. However as you near retirement, a good rue is to balance your stocks with fixed income investments 50% of each,
In my case my fixed income is really a money market fund, since bonds and money markets yield about the same.
How close to retirement you are makes that ration important. If you are very young, the 80% stocks makes sense. Etc.
“...the S&P 500’s recent gains have taken it to its priciest level relative to its hourly cost for the average worker on record.”
I have been an investor since 1980. One who closely tracks the markets and it’s various metrics such as P/E (price to earnings) and EBITDA — earnings before interest, taxes, depreciation, and amortization, etc. Never have I heard the metric as described above regarding the S&P 500 levels relative to average workers salary. It is simply an attempt to somehow minimize the torrid economy this President has brought to us and create a sense envy and anger among those unwilling or unable to take part in this markets success.
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