Here are Mr. Abbott’s calculations for the S&P 500 and its predecessors for the five other great stock market decades since the 1870s. These are price increases, not total returns with dividends, which would be higher. The data starts at Dec. 31 of each year. For the numbers before 1957, when the S&P 500 started, he constructed returns using rough equivalents:
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1989-’99: 315.7 percent.
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1949-’59: 257.3 percent.
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1979-’89: 227.4 percent.
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2009-’19: 189.7 percent.
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1919-’29: 139.9 percent.
So the current decade, so far, is very close in performance to the 1920s.
“History shows that roaring decades really aren’t exceptional for the stock market,” Mr. Yardeni said. When the market is down, he said, it just seems that way.
Room for Worry
The original Roaring 20s, a century ago, ended with a stock market crash and the Great Depression. Mr. Yardeni is fully aware of the unfortunate statement of Irving Fisher, an eminent Yale economist, who said on Oct. 15, 1929, that the stock market had reached “what looks like a permanently high plateau.” The 1929 crash began two weeks later. Professor Fisher’s reputation has never entirely recovered.
While Mr. Yardeni views the current stock market as remarkable — driven primarily by surging corporate earnings rather than mere irrational exuberance — he is careful to say that the rally is not irreversible.
To the contrary, he said, geopolitics could disrupt the markets and the economy at any time, even if A.I. remains a gigantic positive force for stocks. Threats that worry him include the wars in Iran and Ukraine, the latest conflicts over tariffs, the simmering rivalry between the United States and China, and the possibility of runaway inflation.
Rising bond yields are a potentially serious problem, too, but they don’t yet worry him much. He assumes that yields are in a trading range that he called normal — 4 to 5 percent for the 10-year Treasury — and that won’t go much higher or derail the economy.
