Before we start doing any analysis of the numbers, I would like to point out that all 3 major month-end bottoms occurred in month of September and November. So, September 1974, November 1987 and September 2002 had prices listed above for the S&P 500 index.

Let's start our analysis. I want to know which rate of return connects bottoms of 1974 and 1987. That is, if someone bought S&P 500 index at the 1974 bottom of 63.54 and sold the investment at 230.3 in 1987, what would be the price performance of this investment excluding the dividends? The answer is approximately 10.5%. See the table below.

Let's connect the bottoms of 1987 and 2002 with a rate of return. If someone bought S&P 500 index at the 1987 bottom of 230.30 and sold it at the 2002 bottom of 815.28, what would be the price performance of this investment excluding the dividends? The answer is approximately 8.7%. See the table below.

Since the price of S&P 500 index over the long period of time rises by the average GDP + average inflation over that long period, I am assuming that S&P 500 index will rise by 6% in the future. (3% future GDP + 3% future inflation). With this assumption in place, one could see that the 2002 bottom would also move forward at the rate of 6% in the future. This progress at 6% is also calculated in the table below. So, based on this calculation if we were to hit real hard bottom in 2007, the S&P 500 would decline to about 1100, which is somewhere around 20% below today's level.

Year | S&P 500 Price | Price Growth RateRate |

1974 | 63.54 | 10.5% |

1975 | 70.21 | 10.5% |

1976 | 77.58 | 10.5% |

1977 | 85.73 | 10.5% |

1978 | 94.73 | 10.5% |

1979 | 104.68 | 10.5% |

1980 | 115.67 | 10.5% |

1981 | 127.82 | 10.5% |

1982 | 141.24 | 10.5% |

1983 | 156.07 | 10.5% |

1984 | 172.45 | 10.5% |

1985 | 190.56 | 10.5% |

1986 | 210.57 | 10.5% |

1987 | 232.68 | 8.7% |

1988 | 252.92 | 8.7% |

1989 | 274.93 | 8.7% |

1990 | 298.84 | 8.7% |

1991 | 324.84 | 8.7% |

1992 | 353.11 | 8.7% |

1993 | 383.83 | 8.7% |

1994 | 417.22 | 8.7% |

1995 | 453.52 | 8.7% |

1996 | 492.97 | 8.7% |

1997 | 535.86 | 8.7% |

1998 | 582.48 | 8.7% |

1999 | 633.16 | 8.7% |

2000 | 688.24 | 8.7% |

2001 | 748.12 | 8.7% |

2002 | 813.20 | 6% |

2003 | 862.00 | 6% |

2004 | 913.72 | 6% |

2005 | 968.54 | 6% |

2006 | 1026.65 | 6% |

2007 | 1088.25 | 6% |

2008 | 1153.55 | 6% |

2009 | 1222.76 | 6% |

2010 | 1296.13 | 6% |

2011 | 1373.89 | 6% |

2012 | 1456.33 | 6% |

2013 | 1543.71 | 6% |

2014 | 1636.33 | 6% |

2015 | 1734.51 | 6% |

2016 | 1838.58 | 6% |

2017 | 1948.89 | 6% |

2018 | 2065.83 | 6% |

2019 | 2189.78 | 6% |

2020 | 2321.16 | 6% |

2021 | 2460.43 | 6% |

2022 | 2608.06 | 6% |

2023 | 2764.54 | 6% |

2024 | 2930.41 | 6% |

2025 | 3106.24 | 6% |

Notes:

- Table lists estimated bottoms for the S&P 500 price for all years except years 1974, 1987 and 2002.
- The prices calculated from 2007 to 2025 are estimated bottoms, if they ever occur. You are always welcome to double check my calculations and send comments to me.

Data source: Historical quotes from Yahoo finance.

## 1 comment:

Looks like right now the S&P500 at 1100 is close to your prediction for 2008 bottom.

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