The S&P’s in non US$ terms

By Peter Boockvar - September 9th, 2009, 12:04PM

Yesterday I quantified the S&P 500 results going back to Sept ’98 in gold terms and its 70% decline. Let’s look at the S&P’s over the same time frame for overseas investors who have currency exposure. In US$’s, the S&P 500 over the past 11 years is up 3% in total (not including dividends) but in the commodity currencies such as the Australian $ it is down 31% and in the Canadian $ its down 28%. In Yen terms, the S&P 500 is down 40%. Since the Euro began in Jan ’99, the S&P is down 34% in Euro terms. I raise this because in a world where the US$ is the global reserve currency, foreign investors must protect themselves if they want continued US exposure and the $ trends continue. It also gives reason for the reflation trade which is a global phenomenon in light of the long term downward action in the US$. Under current fiscal and monetary policy, nominal stock returns can continue but REAL returns will be tougher to come by.

PERMALINK
Category: MacroNotes.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

2 Responses to “The S&P’s in non US$ terms”

Real Returns « Tortuga Investors Says:
September 9th, 2009 at 12:48 pm
[...] my attention this morning was what investing in the US looked like from an outside perspective. Peter Boockvar, at The Big Picture has this [...]
SINGER Says:
September 9th, 2009 at 2:06 pm
I enjoy your posts on TBP. Thanks for doing them. The REAL v NOMINAL battle is so interesting. One of my favorite arguments re: REAL v NOMINAL is the ” Dow goes from 1000 to 14000 from 1982 to 2007, but in reality vis a vis $ purchasing power and financial success, we are less better off as a country, i.e. two income families, etc.”

The REAL v NOMINAL mirage is also irresistable for goverments because the overwhelming majority of the populace sees nominal gains and is fooled.

Speaking of DJIA in GOLD terms, I did this chart a while back and found it disturbing…

http://1.bp.blogspot.com/_r47sOI__h_M/SQzViRXxLFI/AAAAAAAAA7w/AEn2U7ii7yw/s1600-h/sc.png

As I have hypothesized in the past, with a dollar devaluation, we could see the S&P 500 at 3000, and the overall economic propserity worse than it is now. This would be a perverse outcome but it is still a twisted possibility.