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Stocks for the long haul




The S&P 500 is up 90% since its intra-day low of early March '09 (+94% including dividends), so I thought it might be helpful to put this rally in perspective. As this charts suggests, equity prices are still below their long-term trend, depending on how you like to draw your trend lines. Stocks are not yet ebullient, they are still somewhat depressed. That's consistent with the message of credit spreads and implied equity option volatility, both of which are still somewhat elevated relative to where they have been during "normal" times. It's also the message of PE ratios, which are still somewhat below their long-term average.

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