One of my favorite Mark Twain’s quotes is about “lies, damned lies and statistics.” What I heard on CNBC got me thinking about this quote.
Marc “I am never correct” Faber is bending statistics again. Why he is even allowed on CNBC boggles my mind. The only other guru with a record worse than Faber is Dennis Gartman. Funny how they are both commodity guys. Enough said about their records back to the lies.
Faber claims the S&P 500 has not corrected since 2009. This is technically correct, but incorrect, but not correct on other equity indexes like the Russell 2000.
First, the S&P 500 on just a price return basis. 2011 saw the S&P 500 drop -0.04 or -0.00% on an absolute basis as the S&P 500 began the year at 1257.64 and ended at 1257.60. In 2015, the S&P 5oo fell -14.96 points or -0.73%. So where is the up streak statistic coming from?
It comes by adding in dividends since the S&P 500 has yield of 2.01%. Price charts do not reflect dividends.
Meanwhile, the Russell 2000 lost -5.45% in 2011 and -5,71% last year. So much for an eight year win streak. Rather we are one year into a new bull market.
Remember the Russell 2000 lost -16.35% in 2015. Then in 2016 it lost -16.04% from 12/31/15 to the low on 2/11/16. The Russell had multiple -15% drops since 2010. From the June 2015 peak to the February 2016 low the Russell fell -26.40%.
The definition of a bear market is a drop of -20% or more. Hmm…looks like we had a bear market on the Russell 2000 from 2015 into 2016. Even the S&P 500 fell -14.16% from May of 2015 to February 20156.
We will address other points Faber made on Thursday and Friday. $SPY $IWM.
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