Yet Another Long-Term Mean Reversion Chart

As the S&P 500 pulls within a few percentage points of its nominal all-time highs, despite macro-uncertainty and micro-delusion, perhaps (as UBS' Peter Lee notes) a longer-term perspective is warranted. For over 80 years, the S&P 500 (or its proxy) has cyclically reverted to it its logarithmic trend-line growth. The last time the market pulled away from this bullish up-trend was in 1982 (and the previous period of cyclical reversion took 32 years from 1942 to 1974) and suggests the S&P 500 could well revert to around an 850 level within the next year or so. Perhaps Lee (the anti-thesis of JPM's Tom Lee) needs to read some Birinyi to really understand how to extrapolate? Still, an 80-plus year trend-line perhaps offers some color.


The 80-Year S&P 500 Log Chart Trendline...


Chart: Bloomberg


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