A few weeks ago, someone told me we’re halfway through the 2020s. I was caught off guard, but they were right.
They went on to say that this 1920s is looking even better than the last round 100 years ago, so naturally, I went to the data.
The chart below shows the growth of $1 invested in large-cap stocks 100 years ago (in green) and this century (in yellow).
Somewhat remarkably, the current version of the 20s is much better for investors than the last 20s. Large caps have doubled over the previous five years and were only up by 50 percent at this point 100 years ago.
The question is whether US stocks continue gaining steam like before. A look at the chart above suggests that it was another year before stocks reached the point where they are now. But then, it only took three years to double again. And another two years to rise another 50 percent (or so).
Even the 1929 crash only gives back a year or so of gains. Of course, I end the chart with the 20s, and we know the 30s weren’t great. But given valuations today, it’s hard to imagine that stocks can triple from here, like they did 100 years ago.
I don’t put much stock in comparisons like this, but I thought it was a little bit of fun. I suspect the likelihood of repeat performance is as likely as the return of flapper dresses, boater hats, and speakeasies hidden behind soda shops.
