America’s Current State: A Roller‑Coaster Ride
The word “healthy” feels like a stretch when you look at what’s happening in the USA today. Let’s break it down.
Key Numbers That Make You Go “Huh?”
- Covid‑19 Cases: The U.S. hosts nearly 28% of all global cases, even though it represents just 4% of the world’s population.
- Economic Revival?: The world’s biggest economy officially slipped into recession in February, and the unemployment rate now sits at 13.3%—worse than during the Great Financial Crisis in 2008‑09.
- International Showdowns: A heated clash with China over trade, technology, and policy adds another layer of tension.
- Domestic Turbulence: George Floyd’s tragic death in May sparked nationwide protests against racism, leaving streets choked with unrest.
Stocks vs. Reality
While the nation is grappling with these crises, the stock market tells a different story:
- On 10 June 2020, the NASDAQ hit a record high.
- Today, the S&P 500 lingers just a few percent below its February 2020 peak, even after bouncing 37% from the March lows.
This gap between the financial data and the actual ground conditions raises big questions about the sustainability of today’s market.
History Shows That We’ve Been Here Before
Let’s rewind to 1968—a year that feels as chaotic as a Broadway blockbuster: Vietnam war, the assassination of Martin Luther King Jr. and Robert F. Kennedy, and riots that shook the nation. It was a raw, turbulent period.
Stock Market Performance in 1968
Take the S&P 500 as a gauge. Starting in January 1968, we can look at five time frames:
- 1 year
- 5 years
- 10 years
- 20 years
- 30 years
Across these slices, the market’s price and earnings displayed steady improvement—not a silver bullet, but a fair trajectory for growth.
Takeaway
History is a tough teacher. While the current U.S. situation feels dismal, the past shows that markets can be resilient. But just like any roller‑coaster, it’s all about how you hang on.
Take a closer look
Below you’ll find detailed charts that map out how the S&P 500 performed over the very same timeframes, giving you a clearer picture of the market’s ups and downs.
When the World Looks Like It’s Down, Stocks Still Pretend to Rise
Ever wondered why, even in the most chaotic times, the S&P 500 can still bounce? Let’s dig into a bit of history to find out.
What’s the Deal with the CAPE Ratio?
- In January 1968, the CAPE (cyclically‑adjusted price‑to‑earnings) ratio sat at 21.5. That means investors were paying roughly 21.5 times the average earnings of the past decade, adjusted for inflation.
- Fast‑forward to today: the ratio is a tad higher at 28.5. Still, it’s not wildly out of line with the 1968 figure.
- So, yes—the climb in U.S. stocks over the decades wasn’t sparked by an unusually cheap starting price.
Worry About a New Bear Market?
Feels like tomorrow could be the end of the world for Wall Street. And that’s okay—no one can truly predict what tomorrow looks like. But here’s what I want to throw into the mix:
- Markets can rise even when everything feels like it’s falling apart. The split between Main Street and Wall Street today is no big, one‑off freakout. We’ve seen similar vibes in 1907 and 2009.
- Approach with humility. Picture this: you could teleport back to early 1968. If someone told you the country’s headed for a mess, would you believe that—in a year, stocks might creep up 11 %, and over five years—maybe a whopping 46 % surge? Anyone fell for that math? They’re not kidding.
How to Tackle the Unknown
Thinking about the future is like standing at the edge of a cliff—you might see an opportunity or a risk. Either way, there are always reasons to pull your foot out of the trading area. The safest bet? Keep a long‑term horizon and stick to a solid investment routine. That’s your shield against the chaos.
Heads‑Up!
Got any COVID questions? Keep yourself updated—just ping an official source when you need the latest scoop.
Footnote: This piece originally appeared in The Good Investors.
