If you look at this graph of the SnP500: SNP 500 All time

You will see that it is trading at levels higher than pre 08 or 99. What systemic structural changes in the market have led it to be trading so high? I think the rise from 80-99 can be explained by the deregulation of the financial sector and the rise of China. What is causing it to trade so highly now?

  • $\begingroup$ Isn't this just an exponential curve with some added noise? The world economy (and more importantly, market capitalization) is growing exponentially so that could be a valid explanation. $\endgroup$
    – Giskard
    Feb 1 '16 at 15:10
  • $\begingroup$ That graph has three issues: 1. It isn't adjusted for inflation. Purchasing power changes over time, and the same "value" of the S&P index has radically different levels of purchasing power, depending on the year that value is sampled. 2. It doesn't include dividend yields being reinvested in the index. This is just the weighted market caps of the components, not the total return over that timespan. 3. The graph is in a linear scale, and not a log scale. The movement from the start of 1995 to the end of 1997 is roughly the same magnitude of change as from 2010 to the end of 2014. $\endgroup$ Feb 1 '16 at 23:37

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