Frightening Stat for US Stock Market Investors

The latest Barron's has a letter from a reader pointing out something Marc Faber stated in the Mid-Year Roundtable earlier this month.

Here's what Faber said:

The U.S. stock market measured in Swiss francs, Australian dollars, Japanese yen or gold or silver is already down by 50% to 80% from a 2007 peak.

That's a devastating fact. And an even more devastating indictment of the American Political Class -- which includes members of the media and crony capitalists as well as politicians.

BTW, I linked to the Barron's Mid-Year Roundtable through RealClearMarkets.com, so a Barron's subscription shouldn't be needed to read it. It really is something worth printing out and reading. And re-reading over time.

Comments

[Alex]

Have you noticed that over the past 6 months, the S&P has outperformed gold, as measured by the stock price of CEF, viz.:

http://finance.yahoo.com/q/bc?t=6m&s=CEF&l=on&z=l&q=l&c=&c=^GSPC

In a few days CEF will probably get the advantage again (and in fact, if you click that link after June 30, it may look like I got it wrong), and it still has the advantage over 1 year and 2 years, but it's probably been a while since stocks outperformed gold over 6 months, and I think it's worth noting.

[John]

@Alex: I'd agree it's worth noting. The only thing is that CEF has a lot of silver bullion, and silver has been volatile. GTU might be a better comparison for gold vs. the S&P because it holds only gold bullion (and a bit of cash). And I also agree that 6 months isn't a long enough period.

[Alex]

OK, well comparing GTU over 1 year to the S&P, S&P comes out on top. Over 2 years, GTU wins, but not by much, and quite a bit less if you count dividends, which you should.

Seems like someone should be mentioning this, I'll bet most investors think that gold has been a much better investment than stocks over the last year.

[Alex]

The S&P, without dividends, has beaten GTU over the past year. If this is the peak for gold, we'll look back and say the signs were there. It should be getting at least a little press, I think.

[John]

@Alex: I agree people should use the S&P 500 total return (including dividends) in measuring results. Off the top of my head, I can't recall anyone in the financial media talking about gold vs. the S&P over the past year, so you have a point. It does seem to me that CNBC has an anti-gold bias at times, but I have to qualify that by saying that over the past year or so I don't watch much except for Kudlow.

I don't think gold has reached a peak, but I don't know. I'm certainly not a "sell all your stocks and buy gold" guy.