| | | Yes, plenty to unpack. Mostly no one is factoring in inflation to any of the current or future valuations of any asset, save for maybe precious metals. I could literally write a book on this. I studied Finance during a highly inflationary period, so am well versed on Real Rates of return and interest and Real Values of assets, truths that are lost on the last 2 generations who lived with low inflation until 3 years ago. Cash is the last place to be in these times, unless you are getting 5% minimum in a money market, and then, you are just breaking even..
This is why those who talk of bubbles right now are displaying their low economic IQ. Assets priced in dollars reflect the denominator devaluation. So you can't point to the top line increase without looking at the bottom line increase as well. I..E. A house has gone nominally from 800K to 1MM in just three years. Bubble, right? No, inflation has eroded the dollar by 14%, so the asset price in real terms has increased just marginally, about 3% per year on a real money basis. Do the same with any asset class. $SOX index included.
Back to $SOX. The return on $SOX over the past 36 months is 53%, inflation 14% so:
To do it yourself, just use these nominal and real growth equations and plug in the 21 and 24 asset price along with the inflation rate.
Adding earnings back to the $SOX, as in dividends, would further add to the value proposition, as you now have an ROI. When I have time, I'll look at that impact on the current price, but semi's don't pay high dividends. |
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