Bulls vs bears – The Property Chronicle
Select your region of interest:

Real estate, alternative real assets and other diversions

Bulls vs bears

Golden Oldie

The FTSE 100 and S&P 500 are trading at very different valuation levels.

US and UK large-cap investors have had very different experiences since the crash of 2009. Over these 12 years, the FTSE 100 more or less doubled, going from a low of around 3,500 to a pre-pandemic high of just over 7,500.

The S&P 500 did better. Much better. It went from its financial crisis low of just under 700 to a pre-pandemic high of almost 3,400, giving investors a near 400% gain.

And then, of course, COVID-19 reared its ugly head and both markets crashed hard. However, the crash was incredibly short-lived and both indices bounced back with surprising speed.

After a near-vertical decline in February 2020, from just over 7,000 to just below 5,000 in barely a couple of weeks, the FTSE 100 has since recovered almost all of its lost ground and now sits slightly above 7,000 once again. That’s a nice robust recovery, but it pales into insignificance next to the S&P 500. 

The US index seems to have tied a rocket to its back and lit the fuse”

That may seem like hyperbole, but following the 2020 crash, when the S&P 500 fell from 3,400 to 2,200 in a few weeks, the US index seems to have tied a rocket to its back and lit the fuse. It recovered every inch of ground lost by September and at the time of writing it has reached a new all-time high just above 4,200.

So, despite the fact that the world is still in the middle of a pandemic and that most economies around the globe are struggling to get on top of this virus, the S&P 500 is now 25% above where it was before the pandemic.

Of course, bulls will say that the US tech titans which dominate the S&P 500 have actually benefitted from the pandemic, and they have. But bears will say that a combination of lockdowns, ‘free’ trading apps and social media have created a perfect storm of newbie speculators who have only seen the market go up during their adult lives.

Golden Oldie The Fund Manager

About John Kingham

John Kingham

John Kingham is the editor of UK Value Investor, the investment newsletter for defensive value investors. With a professional background in software analysis, John's approach to high yield, low risk investing is based on the Benjamin Graham tradition of being systematic and fact-based, rather than speculative. John is also the author of The Defensive Value Investor: A Complete Step-By-Step Guide to Building a High Yield, Low Risk Share Portfolio. His website can be found at: www.ukvalueinvestor.com.

Articles by John Kingham

Subscribe to our magazine now!