January 7, 2020 glacierinvest

We discussed inflation in our post yesterday. We referenced financial asset and real asset inflation. I’ve now seen the tweet below from multiple professionals I follow and feel it’s worth sharing here.

The tweet references financial asset inflation in terms of hourly wages of the average US worker. It’s pretty crazy to see how many hours at the average wage it takes to acquire a share of the S&P 500. For me, it’s not a political statement although i could see people making it one. To me, it shows how much financial assets have appreciated relative to the “real” economy. More than anything, it confirms that the stock market in many ways is the US economy. It will be interesting to see if there is a reversal or convergence in this relationship and how it plays out. My gut feeling is that it will have to reverse at some point in time but that may be years or even decades from now for all I know.