In this post, I would like to share two very long-term charts that I hope will show US stocks in a different light.
The first chart goes back to year 1982 and shows the relationship between stocks and bonds during this time:
The chart above shows that US stocks were in a true bull market from 1982 to the year 2000. Since that time however, stocks have been in a corrective consolidation period for the past 12 years. It is only now, at long last, that stocks appear to breaking out of this bullish channel.
From this long-term perspective, stocks do not appear to be in a bubble to me. If a bubble does exist, it is more likely to be in the bond market - not the stock market.
Moving on, the next chart shows the long term relationship between stocks and gold:
Similarly, we see that stocks were in a true bull market from 1982 to the year 2000. Interestingly, though, through the lens of real money, stocks truly only bottomed in the year 2012 and have only recently broken out.
From this perspective, stocks actually appear undervalued and oversold to me. Paradoxically, it is gold, the metal that everyone seems to think is nearing a bottom, that is over-valued.
