Saturday 10 June 2017

Masters of manipulation or why is the S&P 500 not going on the road since 1987?

You've probably heard of the comparisons between the current S&P 500 blue chip index and the 1987 pre-crisis one.
The charts we are talking about look like this:


They look alike don't you think? Yes, but only at first glance ...
Taking into account the percentage change in the index, the situation looks quite different, and the similarity is not that big anymore.
Since the presidential election in the US, so far, the broad index has added about 14% to its value. It has made 22 new historical records of closure since the beginning of the year.


For comparison, from the beginning of 1987 until September of the same year, the index has added nearly 40% of its value.
In fact, for the past two and a half years, before the 87th crash, the index has risen by over 100%. For the same period to date, the US index grew by only 20%.
So experts recall that when making comparisons, it is important that they are comparable and compare apples with apples and pears with pears. Otherwise, the media love to make similar comparisons and search for sensational titles.





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