Silver vs CPI vs Stock Market

Stock valuations are now VERY RICH and I am cautious entering 2022. It's looking like 2000, where the overall index is inflated and pricey, but many stocks aren't that expensive.

That's the thing with cap-weighted indices.

 

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I miss all the "silver going to $250-500! Soon!" videos and posts.

 

I have plenty of silver but I wont sell it till I need the money no matter what the price does between now and then.

 

It was a tough year for equities, especially the NASDAQ. Silver was one of the best investments in 2022 but still didn't keep up with inflation. I-bonds were the best place to be in 2022. Inflation was 6.8% through November. The S&P 500 was down 19.4%, NASDAQ was down 33.2%, and the Dow was down 8.8%. Silver was up 3.0% in 2022. Despite the poor showing of equities in 2022, it continues to be the best investment overtime (depending on the window). Below is the latest update for 2021.

Full dataset.



Chart (1980-2022)



Chart (1990-2022)



Chart (2000-2022)



Chart (2010-2022)

 

Toe eliminate timing bias or selection bias, you always use ROLLING time periods and see how various asset classes do over that time frame.

You are right about silver and PMs: they can star for a few years but over time they can NOT match equities if for no other reason than stocks generate an additional 40% with dividends.

Gold and silver's main competition are not stocks or bonds, but all the new cryptos IMO and they clearly had a lousy 2022 with tons of negative headlines.

 

It was another good year for the equities market with the NASDAQ up 30%, S&P 500 up 24%, and Dow up 14%. Silver also had a good year, up 19%. Inflation moderated to 2.85%. The following is the updated dataset with trends over time.

Data Set since 2010



Trends (1980-Now).



Trends (1990-Now).



Trends (2000 to Now).



Trends (2010-Now).

 

If valuations were very rich in 2022, what do you think about it now?! Not an expert by any means but you look at that chart and think something major is going to happen. It seems like its really easy for the bottom to fall out over just about anything and difficult for a new spike upward from where it is. Just a general thought but would love to hear a more technical analysis with a new administration taking over.

 

I'm no expert either but been investing in the markets since the 80's. I tend to be a little more aggressive with my investments, but did buy into an annuity in the late summer of 2024 with 40% of my portfolio with guaranteed returns at a good rate. It was just prior to the rate reductions from the Fed. Meanwhile, my other investments are mostly US equities. I moved out of real estate, global stocks, and corporate bonds a few years ago. Those investments weren't too good and continue to struggle. I'm sure we'll see another dip in the market. I will ride out the dips, continue to buy, and sell near the top.

 

I like it when the non-experts weigh in you just read and learn and say nothing.

 

Stocks are not cheap for sure...but they aren't anywhere near as expensive as in the past.

The Mag 7 are really wonders. Their profitability and ability to withstand economic downturns makes them light-years better than the Nifty Fifty (1973) or Internet Darlings (1999) of the past. If you exclude the Mag 7, the S&P 493 are selling in the middle of the pack valuation-wise.

I wouldn't load up here but it's not a bubble. Profitability and ROEs and ROICs are much better than 20 or 50 years ago -- it's not even close. The leaders in the past were Kodak, Polaroid, GM, U.S. Steel, Cisco, EMC, Intel.....today, it's NVDA, MSFT, GOOG, APPL, etc.

The quality of earnings, their moats they have erected to protect their businesses, it's really amazing. Check out the S&P 500 weight of the 10 largest stocks chart (below).

We have 7 or 8 trillion-dollar market cap companies....Europe has NONE !!

For quick and easy charts to see where we are valuation-wise, this is outstanding:

https://am.jpmorgan.com/content/dam...to-the-markets/mi-guide-to-the-markets-us.pdf

It should load automatically but if not....Goto the download button and download it (no need to login or register your email). You can grab a PDF or PowerPoint (better) and scroll very easily through the charts.

Key charts are on Pages 4, 5, 9, 10, 11, 12 and others.

 

Silver jumped. .96 but no chart..

 

We are in the 4th Industrial Revolution. If you are not invested in technology, you are missing out. It may be a bumpy ride at times, but the graph goes from the bottom left to the upper right. Long term investors are rewarded.

Today NVDA is on sale!

 

Some bumps are bigger than others, though (i.e. the 2000 dot-com bubble rupture).

 

Dot-coms were not profitable. The Mag 7 are flush with cash and extremely profitable. Apples to oranges.

 

You mean a more fundamental analysis.

Valuations are probably better overall since the S&P 500 has been driven up by the Mag 7. Valuations for the S&P 500 ex-Mag 7 or ex-10 largest market caps are middle-of-the-run.

Lots of stocks are off 30% from 52-week highs.

Check out this great quarterly survey. Goto Pages 4, 5, 9, 10, 11*, and 12. There's more good stuff but if you want to see how we stack up historically, that's the meat of the report.

This is a GREAT survey that you can usually find on the web and bypass the client login stuff. Bookmark it, it's really a great review.

https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

 

They've done OK in the aggregate the last few years, except Global ex-U.S. has lagged bigtime. Of course, the S&P 500 reigns supreme.