Stock Market Inconsistencies and Inflation Consistencies

Last week I presented a program on whether the current “Wacky Stock Market is an exception or a New Normal.” The program went well, and I explained and illustrated that big moves in the stock market are not a new normal but a long-established norm.

During the presentation at the East Brunswick Public Library, I used graphs from 1990 to the present and some ten-year graphs. They show many year-to-year inconsistencies, but the stock market indicated a 32-year upward trend in stock prices and dividend payments, albeit some large current downturns in stock prices. I also explained what I meant by “The Stock Market” and showed illustrations of two of the bluest blue-chip stocks that are lower today than ten years ago.

With regard to interest rates, there has been a consistent downtrend that has only been halted by the increases in the U.S. Treasury interest rates during the last year. What I did not discuss was the huge drops in the value of those Treasury bonds during this period. However, people with these bonds who are able and intend to hold them until maturity should suffer no losses while getting the consistent interest payments they were satisfied to get when they purchased those bonds.

There was one great consistency: a steady upward trend in the cumulative inflation rates and an erosion of buying power. You would need $2.25 to purchase today what a dollar could buy in 1990.

I used 15 charts in the 1-hour Zoom presentation, and if you want a copy of the handout along with my previous 90-page “Understanding the Stock Market” handout, send me an email at [email protected]. Just put “EB Library” as the subject; no messages necessary. Of course, when you get the handout, you will not get my witty and mellifluous comments accompanying them, but, hey, nothing is ever perfect. My next program at the EB Library is on October 20 at Noon, titled “When is a good time to start a business?”

Enjoy!