Get real

When we look at stock market indices, we tend to look at nominal returns. Here markets look stretched with the S&P 500 is up 20% this year, and the Nasdaq is near record highs after gaining a third in 2023. Major indices worldwide have made double-digit gains. However, what has changed over the last 2 years is the arrival of inflation. Once adjusted for inflation, the S&P 500 a full 12.5% below 2021’s record on a total return basis. In real terms, stock-markets are not as stretched as it may seem.