SPX Comparison: 1982-87 vs 2002-08

At last night’s podcast, I mentioned the differences between 1987 and 2007, given the net gains pre- and post- crashes. I specifically mentioned that an SPX buyer in 1982 was better off six years later than an SPX buyer in 2002 six years later.

Several people have challenged me on this (why?). A quick look at he charts shows the difference between the two eras:

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SPX 1982 – 1987
Spx_19821987_gains

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SPX 2002 – 2008
Spx_20022007 
Charts via FusionIQ, Bloomberg

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The relative gains are quite different:

1982-87: trough to peak gains were 228%, followed by a 33% selloff. At the low point in 1987, our 1982 SPX buyer was ahead 119%.

2002-08: trough to peak gains were 101%, followed by a 29% selloff. At the low point in 2008, our 2002 SPX buyer was ahead just 43%.

The primary distinction between the two eras is that the year 1982 followed a 16 year bear market; 2002 was a mere 2 years after an 18 year Bull market. 

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