You always hear "the stock market isn't the economy", but both Biden and Trump have pointed to it as a signifier that we have a strong economy despite everyone else thinking otherwise.
So it's probably worth factoring in how inflation has affected the stock market returns to see if it's actually gone up or it was just inflation.
In the past five years, the S&P 500 is up about 90% give or take, so $1 of value in the S&P 500 in November 2020 could be sold for $1.90 today.
Official inflation statistics indicate 25% inflation since 2020. So, what would cost $1 in 2020 would cost $1.25 in 2025. So the inflation adjusted growth of the S&P 500 is $1.90/$1.25 =$1.51, or 51% growth. That's right, after accounting for inflation using the official statistics we've grown 40% less; only 10%/year.
But we know the amount of money in the circulation doubled since 2020 and other countries have also experienced dramatic inflation. We should probably use a common point of comparison to a long term, inflation resistant store of wealth. So how does it compare when we use the value of gold as the basis for inflation?
Gold has seen 120% inflation in the past five years, so buying $1 worth of gold in 2020, it could be sold for $2.20 in 2025. So by using this calculation, the inflation adjusted growth of the S&P 500 is $1.90/$2.20 = $0.863, for a loss of $0.137. So when using gold as the basis of inflation, the S&P 500 has actually lost 13.7% of its value in the past five years, or about -3.5%/year after accounting for inflation. Let me repeat that, you still lost money by investing in the "booming, all time record, about to burst" stock market compared to the oldest, most basic store of value.
I'll leave it up to you to determine which one is more accurate.
