Connecting Bottoms of S&P 500

There were 3 major bottoms in the S&P 500 in the last 35 years. These bottoms occured in 1974 at 63.54, in 1987 at 230.30 and in 2002 at 815.28. I am considering month-end prices instead of intra-day prices because we are looking at the history of 30+ years. Assuming that these were indeed bottoms and believing that we would not break below these (especially, 2002) bottoms again; one can start to do some analysis and project where the future bottoms may be found.

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.