The US stock market has soared over the last 35+ years with the S&P 500 and the Dow Jones Industrial Average up around 3000% since 1980. The tech-heavy Nasdaq Composite is up twice that around 6000% from 1980 to today.
Question is should we expect this to continue? In a recent interview with Financial Sense, Woody Brock, Founder and President of Strategic Economic Decisions, discussed the four main causal forces of the US stock market’s explosive growth over the last three to four decades and whether these are going to persist going forward.
The last 35+ plus years have led to a nirvana, perfect-case scenario for the stock market, dramatically boosting the net worth of American households to over a hundred trillion dollars, he said.
Such periods of massive wealth accumulation don’t continue forever and are usually followed by a reversion to the mean. Though people have been predicting this for many years, even while the stock market has continued to soar higher, Brock makes an extremely compelling case that we may be at or near a major turning point based on his analysis of the four causal drivers of soaring stock prices over the last 30-40 years.
“If you look back at the year 1981 and asked someone what’s the chance that all four of those things would happen together, the answer is zero percent joint probability. So we’ve been hugely and pleasantly surprised by what’s happened and I believe that most of these things are finished and having basically stolen wealth growth from the future, we will now have to pay it back.”
