|
Related Topics
|
Category: Nasdaq, S&P 500 and Dow Jones Industrial Average (DJIA)
Date: 2 January 2021 We compare the performance of the NASDAQ, S&P 500 and Dow Jones Industrial Average (DJIA) for the year that was 2020 on the same performance chart and interactive graphic.We also take a look at the performance of these major stock market indices over longer periods of time such as the last 10 years. Over the longer term the NASDAQ has easily outperformed the S&P 500 and Dow Jones. But in recent times the NASDAQ has experienced a few days of very sharp declines compared to the Dow Jones and the S&P 500.
|
|
While we believe all three major US stock market indices are horribly overvalued we do believe that the NASDAQ is the most overvalued of them all. The NASDAQ is loaded with large tech stocks and most of these are trading at extremely lofty valuations which has very rosy assumptions regarding the future earnings potential of these firms. Any revenue or profit expectations misses by any of these firms could see their stock prices plummet at a rapid pace as markets realise that tech stock valuations have gotten out of control. "
Comparing the NASDAQ, Dow Jones and S&P 500 over the last 10 years on one chart
The graphic below shows the performance of the Dow Jones Industrial Average (DJIA) index over the last month. As soon as a user clicks on the Nasdaq or S&P500 the graphic recalculates and shows the returns of the additional indices selected. The graphic will recalculate the returns if users provide their own dates, within the last 10 year (or they can select predefined dates from our Zoom box in the graphic). Data for the graphic obtained from MacroTrends.Net
The performance of the Dow Jones, Nasdaq and S&P 500 for 2020
The image below shows the performance of the Dow Jones, Nasdaq and S&P 500 for 2020. As it shows the markets saw a sharp decline during the early part of 2020 due to the impact of Covid-19 related lockdowns. The markets have recovered strongly since then, this while Covid-19 numbers keeps surging. We do believe markets are overvalued at its current level and we cannot understand why the markets have had such a strong run during the later part of the year.
Performance of the various market indices during 2020
- NASDAQ: 42.87%
- S&P500: 16.11%
- Dow Jones Industrial Average (DJIA): 6.89%
Performance of the major US market indices over various time periods
This section will take a look at the performance of the NASDAQ, Dow Jones and the S&P 500 over various time periods including the last week, month, year and over the last 10 years
1 week:
1 month:
1 year:
5 years:
10 years:
1 week:
- S&P500: 1.43%
- Dow Jones Industrial Average (DJIA): 1.35%
- NASDAQ: 0.65%
1 month:
- NASDAQ: 4.36%
- Dow Jones Industrial Average (DJIA): 2.42%
- S&P500: 2.37%
1 year:
- NASDAQ: 42.87%
- S&P500: 16.11%
- Dow Jones Industrial Average (DJIA): 6.89%
5 years:
- NASDAQ: 179.3%
- S&P500: 93.6%
- Dow Jones Industrial Average (DJIA): 85.9%
10 years:
- NASDAQ: 377.3%
- S&P500: 192%
- Dow Jones Industrial Average (DJIA): 157.4%
NASDAQ easily outperforms the Dow Jones and S&P 500 over most time periods
So from the interactive chart and summary above it is clear that while the NASDAQ has been slightly underperforming the Dow Jones and the S&P 500 over the very short term it has easily outperformed the Dow Jones and S&P 500 most longer time periods looked at. In general we believe the markets are horribly overvalued and stock market prices have been pushed up by loads of free money (read stimulus cheques). This has created a lot of artificial demand for stocks as people look to user their stimulus cheques to make more money from it.
World economies have taken the biggest hit since the financial crises, in fact the Covid-19 related lockdowns have hurt economies across the world far more than the financial crises yet markets are trading at all time highs? How can this make any sort of sense? The only true explanation is to much excess cash flooding the markets.
While we believe all three major US stock market indices are horribly overvalued we do believe that the NASDAQ is the most overvalued of them all. The NASDAQ is loaded with large tech stocks and most of these are trading at extremely lofty valuations which has very rosy assumptions regarding the future earnings potential of these firms. Any revenue or profit expectations misses by any of these firms could see their stock prices plummet at a rapid pace as markets realise that tech stock valuations have gotten out of control.
World economies have taken the biggest hit since the financial crises, in fact the Covid-19 related lockdowns have hurt economies across the world far more than the financial crises yet markets are trading at all time highs? How can this make any sort of sense? The only true explanation is to much excess cash flooding the markets.
While we believe all three major US stock market indices are horribly overvalued we do believe that the NASDAQ is the most overvalued of them all. The NASDAQ is loaded with large tech stocks and most of these are trading at extremely lofty valuations which has very rosy assumptions regarding the future earnings potential of these firms. Any revenue or profit expectations misses by any of these firms could see their stock prices plummet at a rapid pace as markets realise that tech stock valuations have gotten out of control.
One of the biggest stock price bubbles in recent years is that of Tesla (TSLA). We really do not know how people are parting with their cash for Tesla shares at its current price. And Tesla is just one of many hundreds of examples of tech related stocks that are horribly overvalued. Be careful when investing in the markets at its current lofty valuations.
The markets have surged in November following the US elections which saw President Trump being trumped by Joe Biden, making Trump a one term president. While Trump and his campaign tried various different courts and tactics to try and claim that the election results are invalid as they were rigged, it seems they have a very weak case and most of these cases are thrown out pretty quickly by the courts.
But while Biden might be the next president of the USA we believe he enters it when markets are at all time highs an trading at ridiculos multiples. It will affect his performance once he is done as president as markets are at a very high base and we doubt stock market returns will be anything to write home about after his presidential term is over, purely based on the facts that the markets are priced at extremely expensive levels and we cannot really see it moving substantially higher in coming years.
The markets have surged in November following the US elections which saw President Trump being trumped by Joe Biden, making Trump a one term president. While Trump and his campaign tried various different courts and tactics to try and claim that the election results are invalid as they were rigged, it seems they have a very weak case and most of these cases are thrown out pretty quickly by the courts.
But while Biden might be the next president of the USA we believe he enters it when markets are at all time highs an trading at ridiculos multiples. It will affect his performance once he is done as president as markets are at a very high base and we doubt stock market returns will be anything to write home about after his presidential term is over, purely based on the facts that the markets are priced at extremely expensive levels and we cannot really see it moving substantially higher in coming years.
Related Topics