S&P Inflation Adjusted

From Chart of the Day:

For some long-term stock market perspective, today's chart illustrates the inflation-adjusted S&P 500 since 1900. It is of interest that, when adjusted for inflation, massive bear markets similar in magnitude to what occurred in the early stages of the Great Depression (i.e. early 1930s) are actually not all that uncommon. For example, the secular bear markets that concluded in the early 1920s and early 1980s were of similar magnitude. It is also of interest that the inflation-adjusted S&P 500 is up 550% since 1900. This equates to an average annual return of 1.7%. Currently, with the S&P 500 trading 41% off its inflation-adjusted year 2000 peak, the S&P 500 trades very much near the center of its century-plus upward sloping trend channel.

Link: Stocks Inflation Adjusted.

Comment: Market looks to be at some sort of mid-level value based on this analysis. In particular it is disconcerting that the slope of this chart is still moving lower. However I would note that if we do start to see a better environment for stocks and if the economy starts to recover, then based on this inflation adjusted chart stocks would seem to have more room to move to the upside before they would be overvalued.

*Long ETFs related to the S&P 500 in client and personal accounts.