S&P500 Normalized with M2
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S&P500 Normalized with M2
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Re: S&P500 Normalized with M2
#2I’m trying to click the X to close the window but won’t do anything.
Re: S&P500 Normalized with M2
#3It would be more helpful to compare S&P 500 vs CPI rather than M2. It's purchasing power that matters to most investors, not the comparison to how much money exists.
S&P 500 gained ~40% since January 2020, and CPI gained ~18%.
Even better would be comparing to the total stock market rather than S&P 500. Using something like DWCF or VTSAX
Re: S&P500 Normalized with M2
#4"All the technological advantages humans made"
I didn't notice them. Is there anyone who believes Google or Microsoft are now significantly more useful than in 2003? Does anyone feel like Facebook has gotten more useful in recent years? Apart from compensating for ever slower Electron apps, does the additional CPU power in modern Macs really improve my life? How come VS Code still feels so much slower than Visual Studio 6 on Windows 98 SE?
Maybe it's time to accept the obvious conclusion that new != better when it comes to technology.
Re: S&P500 Normalized with M2
#5careful with crypto guys and inflation truthers - they cant articulate the velocity theory of money, but are very confident that they know better than the fed (usually spelled FED as a shibboleth) on what money is
Re: S&P500 Normalized with M2
#6Why on earth would you divide the market cap of the 500 largest companies in the US by the money supply? It's a completely arbitrary and silly thing to do. Why not divide the number of cheese wheels by the diameter of the moon?
This chart isn't mind-blowing, it's straight-up meaningless.
[edit] Also note the S&P 500 isn't even a consistent numerator, it's an index whose constituent companies are replaced over time at the whim of a committee, lol. Remember when Tesla got added in 2020, and the Apartment Investment and Management Co. got removed? - and as a peer comment pointed out, this doesn't even include dividends and distributions.
Re: S&P500 Normalized with M2
#7It's up substantially when calculating total return (including dividends)
https://twitter.com/Tsartoshi/status/1680139560074764288?s=2...
Re: S&P500 Normalized with M2
#8This is good news. It means the Fed is doing its job. M2 is a measure of the amount of money in the economy, not a measure of inflation.
If the economy grows, the amount of money needed to lubricate the economy also grows. If the money supply doesn't grow while the economy does then we'd see significant deflation.
So we want these two measures to be relatively balanced, and they are. Yay!
Re: S&P500 Normalized with M2
#9It would be more helpful to compare S&P 500 vs CPI rather than M2. It's purchasing power that matters to most investors, not the comparison to how much money exists. S&P 500 gained ~40% since January 2020, and CPI gained ~18%. Even better would be comparing to the total stock market rather than S&P 500. Using something like DWCF or VTSAX
Right, this chart is the epitome of misleading statistics. It was made by someone who doesn't understand what they're talking about, and its intended audience is people who don't understand what they're reading.
Re: S&P500 Normalized with M2
#10Why on earth would you divide the market cap of the 500 largest companies in the US by the money supply? It's a completely arbitrary and silly thing to do. Why not divide the number of cheese wheels by the diameter of the moon? This chart isn't mind-blowing, it's straight-up meaningless. [edit] Also note the S&P 500 isn't even a consistent numerator, it's an index whose constituent companies are replaced over time at…
A common narrative lately is that a lot of stock prices are highly correlated with money supply. E.g. The only reason 2021 bubble happened is because the FED printed trillions of dollars.
I wouldn't say its completely arbitrary given this has been a common discussion point.
No opinions on whether it has meaning, but wanted to add the relevance.