E Stocks, Bitcoin, And Gold - How Much Are They Worth?

Stock prices, according to the S&P 500, are up seventy percent from their lows last April. The Nasdaq Composite at its most recent high point was up, even more, sporting a ninety-five percent increase from its nadir. A number of individual stocks have done even better.

For the entire year 2020, however, stocks were up a more modest sixteen percent (S&P 500) and only seven percent for the Dow Jones Industrial Average.

However, the outsized performance of the Nasdaq was even more apparent on a full calendar year basis. For 2020 the Nasdaq was up forty-three percent. Relative to its peers, the average Nasdaq stock was up more than three to four times as much as non-Nasdaq stocks.

Maybe more impressive is that the Nasdaq Composite gain of forty-three percent in 2020 came on top of a thirty-five percent gain in 2019. The Nasdaq's total gain for the full two years was ninety-three percent.

The last time we saw increases in back-to-back years of similar or greater magnitude for the Nasdaq was in 1998 (up 39%) and 1999 (up 85%); for a two-year gain of two hundred fifty-seven percent.

Those euphoric years were followed by three years of negative results: 2000 (down 39%), 2001 (down 21%), and 2002 (down 31%). At one point, the Nasdaq had dropped eighty percent from its peak in 1999.

The three-year cumulative loss for the Nasdaq of sixty-seven percent would seem to say that stock prices had increased beyond any point that was reasonable. But what is reasonable?

Have we reached that point again for the Nasdaq and stocks in general? What about other assets (bitcoin, gold, etc.)? Further, how much is anything worth?

Blockchain, Technology, Smart, Bitcoin, Money

Image Source: Pixabay


WHY PEOPLE BUY STOCKS

People invest in stocks because companies, in general, provide goods and services of a productive nature that add value to our economy -  today, and in the future. Over longer periods of time, it becomes value-added. This means that there can be profit potential, even without price discrepancies.

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Kelsey Williams is the author of two books: Inflation, What it is, What It Isn't, And Who's Responsible For It and  more

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William K. 2 weeks ago Member's comment

Thanks for the interesting insights about value and price. I would add my thinking that value relates to how much of my earning efforts I would trade for something. Of course that makes my determination of value very personal, and so it may not be relevant to some others, and certainly not to those who do not expend earning efforts to achieve income. Those folks are just plain "different", not that I am judging them, or condemning them, only pointing out that they are different. And certainly Bitcoin is a speculative creation, claiming to offer security by means of Blockchain technology, while mostly providing security and obscurity for financial transfers that seek to be hidden. But a skilled salesperson can sell to those with funds to buy, no matter what the product.

Wall Street Wiz 4 days ago Member's comment

Agreed.

Michele Grant 2 weeks ago Member's comment

#Bitcoin was intended to be a digital currency, not tied to any specific government entity and to be completely autonomous. I've never been a fan since I find it highly volatile, too useful for criminals, and too subjective to the whims of governments who could easily make it illegal.

Bitcoin Bandit 2 weeks ago Member's comment

Michele Grant, Yes, most people who buy #Bitcoin aren't buying it to actually spend it, they are buying it as speculators in hopes of selling it when it goes high, just like a stock.