Fed’s Powell referred to DOJ for potential criminal investigation
US stock markets have been such a bad investment lately (’’What? Did Alf have a pizza indigestion?’’).
Not really, I am just looking at data.
The chart below shows the relative performance of the S&P 500 total return index against the Gold total return index.
Using total return indexes is very important here for two reasons:
- The S&P 500 pays dividends
- Owning Gold comes at an opportunity cost (e.g. negative carry investors occur by owning Gold instead of T-Bills)
The result of this simple analysis is quite striking.
Over the last 3 years, owning the S&P 500 plus reinvesting dividends has underperformed owning Gold by 13%. Wow.
Massive fiscal stimulus and more recently USD-negative unorthodox policies have created the illusion of ’’stock markets going up’’.
Of course, they are going up - nominal growth has remained solid, and US companies keep producing solid earnings growth.
But when you take a deep look at things, it’s much easier to assign market performance to one common denominator.
The USD - the global denominator of assets - is actually going down, and as a mirror image, assets denominated in USD are going up. And if anything, Gold has recently outperformed stocks...
Do you think this trend is set to continue?
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