Monday, May 3, 2010

Crossing the S&P 500's Rubicon v.23

Here's a list of dates when the S&P 500 crossed above the 1200 level.

1. 12/21/1998
2. 4/18/2001
3. 7/12/2001
4. 7/26/2001
5. 12/14/2004
6. 12/21/2004
7. 2/4/2005
8. 2/11/2005
9. 2/24/2005
10. 6/1/2005
11. 6/9/2005
12. 6/13/2005
13. 6/28/2005
14. 7/5/2005
15. 7/8/2005
16. 10/31/2005
17. 9/16/2008
18. 9/18/2008
19. 9/25/2008
20. 4/14/2010
21. 4/20/2010
22. 4/29/2010
23. 5/3/2010

The S&P 500 closed today at 1202.26. Can't you just feel the excitement in the air? We finally did it! Lucky #23! There's probably no turning back now.

Stocks: Why Investors Can Still Expect 8% Long Term

With the S&P 500 index now hovering around 1200, and analysts predicting $78 in operating earnings over the next year, that translates into a price-to-earnings multiple of roughly 15.

It only took $1.6 trillion in new government debt in 2009 to get us here too. That's only $5,200 in extra debt for every man, woman, and child in this country. As long as we can keep believing in the cult, the world will be our oyster!

Oh no, there goes Toyko

Japan's dispiriting battle with deflation raged into its 13th straight month in March as prices continued to decline and the unemployment rate rose sharply.

History shows again and again how nature points up the folly of man.

Source Data:
Yahoo: S&P 500 Historical Prices
St. Louis Fed: Total Public Debt
St. Louis Fed: Total Population


EconomicDisconnect said...

Godzilla scene from "One Crazy Summer":

Too funny!

Stagflationary Mark said...

I enjoyed One Crazy Summer almost as much as Better Off Dead.

The Godzilla scene was the best in the movie. I laugh just thinking about it.

EconomicDisconnect said...

Better off Dead is a way underrated film, glad we can agree on that!

EconomicDisconnect said...

"This is pure snow! Do you know the street value of this mountain!"

EconomicDisconnect said...

As always Jesse is way smarter than I and says what I want to better than I could:

Key ideas:
"tend to believe that the modifications to the inflation measures, including the deflator, that have accumulated by the federal bureaucracy over the past ten years are greatly understating the actual inflation in the economy.

There are very positive benefits for the government to do this. The lower the deflator, the better and higher the real GDP figures will appear. And a low measure of official inflation reduces increases in payments in Social Security and other programs with Cost of Living Adjustments (COLA), including official debt payments on the bonds and the TIPS.

Gold gives the lie to this, which is why it is so hated by financial engineers and statists.

On the other hand, the inequality of income distribution in the US is at level not seen since the 1920's."

But then again I tend to be sarcastic/pessimistic.

Stagflationary Mark said...


"tend to believe that the modifications to the inflation measures, including the deflator, that have accumulated by the federal bureaucracy over the past ten years are greatly understating the actual inflation in the economy"

There's no "tend to believe" about it. You either know or you don't know. Why hasn't Jesse been tracking his own personal expenses? He'd at least have some anecdotal evidence to share. He's certainly had 10 years to accumulate the data.

I have said this many times and will no doubt continue to say it. I track every penny I spend on everything I spend it on. I have done this since 2000. I do not see this "great understatement" of inflation.

If inflation was as out of control as many conspiracy sites claim, I'd be really hurting right now as a retired saver. I'm not. These low real yields are causing some pain, but that's another topic entirely.

I could list off pages and pages of anecdotal evidence from my personal expenses to back my claim as it relates to my own personal level of inflation. Here's yet another one.

Yesterday I reread David Weber's book titled "On Basilisk Station". It was printed in June 1994. It cost $5.99 at that time (although I bought it in a used book store a few years later).

You can now buy it (or most of his other paperbacks) new for $7.99.

That's a 33.4% increase in 16 years. That might sound like a lot but it is only 1.8% per year on average.

Meanwhile, the government claims overall prices have risen 47%. That's 2.4% per year on average.

I could go on and on, but what's the point? People want to believe in conspiracies. They'll "tend to believe" almost anything.

You know what else? If I was super frugal I could even read "On Basilisk Station" for free these days.

On Basilisk Station

The whole book is right there ready to be read. It won't cost you so much as a penny and there is nothing at all illegal about it. Give it a shot. You might enjoy it! :)

Introducing the Baen Free Library

Baen Books is now making available — for free — a number of its titles in electronic format. We're calling it the Baen Free Library. Anyone who wishes can read these titles online — no conditions, no strings attached.

That's deflationary and the government has no idea how to even factor that in.

I have supported this author directly by buying some of his paperbacks at full price directly from Amazon. I will be buying several more once I think up $25 worth of things to buy at Amazon to qualify for their free shipping.

That's also deflationary. The IRS claims it costs me 50 cents per mile to operate my car and I won't need to do it.

Stagflationary Mark said...


One more thought.

As I was typing my last response my girlfriend sent me a story that tuition prices are going up 7% at her college. Students are certainly feeling the inflationary pain more than most.

The government isn't exactly trying to hide the nasty details though.

Consumer Price Index for All Urban Consumers (CPI-U)

The education index is currently 197.418. It was 100 in December 1997.

That's a 97.4% increase in just 12.25 years. That's an average increase of 5.7% per year.

I'm with Mish on this one.

University Professors Outsource Grading Papers to India

We need to start outsourcing university professors and university administrators. It's nearly criminal that the cost of education and the cost of college text books can rise exponentially faster than the cost of my paperbacks.

AllanF said...

Speaking of 1200 SPX, I think today she went down for the count. Well, not really for ever, of course. Rather hibernation for a few years.

Stagflationary Mark said...


Wow. I'm such a late night person. I missed much of the excitement today.

I'm left with two choices. I could take the honorable high road and pretend it never happened. Or... I could offer some sarcasm with some sort of musical tribute post.

Decisions, decisions!