Every retail investor today makes the same exact mistake. They read articles like this and then they go look at a historical chart of the market. They see a massive run up to present day...with the wild fluctuations for 2000 and 2007 magnified due to the exponential data. Psychologically, they think this must be the pattern of the market, we are obviously due for a fall.
Then, one day years later, after they've lost out on ridiculous gains waiting for the "big drop," they learn that when looking at a historical market chart to switch from linear to logarithmic scale.
Suddenly the crazy recent capitulations just look part of a steady climb with minuscule blips along the way. Go ahead and try it on Google Finance with the S&P. You'll be amazed.
All but predicting a "permanent prosperity" makes you sound like pundits just prior to the 1929 market crash.
Historically, booms and busts are what the market does, go back over the last 150 years, since the end of the American Civil War - you'll see a boom, following by a bust - the Federal Reserve and the changes enacted in the aftermath of the depression has dampened it a fair bit, but it still happens - and could happen just like it did before.
Our financial system is very very fragile, and like a chain stitch, one loose thread in the wrong place, and the whole thing could unwind - thats the problem. So Remember in the end, a wave of bank failures are what made the depression last a decade, not just the recession itself.
I never said "permanent prosperity" anywhere in my comment. Of course the market has boom and bust cycles. Will the market pull back sometime in the near future? Probably.
However, it just doesn't matter for anybody with an investment horizon over 10 years. The gravity of the markets is upward. Timing the broad market consistently is statistically impossible.
The subprime mortgage crisis was statistically a once in a lifetime drop, only comparable to 1929. It's occurance was due to a fundamental flaw in the system. It wasn't part of the standard "pattern of the market." Everybody sitting on the sidelines waiting for the next flaw to rear its head will likely decompose before that happens.
The size of your future returns directly correlates to the amount of risk you are taking. If you are on the sidelines it's a statistical certainty you'll get destroyed by inflation.
Isn't logarithmic scale tool for showing exponential growth as linear? So doing it is not making growth linear. It is still exponential or I do not understand your argument.
I'm not saying it's changing the exponential nature of the market. It's just more properly displaying the data for human interpretation. Looking at a linear chart of historical price data will cause you to make bad decisions.
A linear y-axis is terrible for viewing historical market data because you can't compare percent changes across historical periods. Because the price of the market has grown exponentially, any movement in 1929 for example looks like a minor blip in comparison to anything happening in present day (due to the exponential price appreciation).
On a log scale, you can see that movement in the proper context compared to 2000 and 2007.
So the logarithmic scale is just an approximation of this "price appreciation" or whatever - wouldn't a better solution be to weigh the market data by it and still use a linear chart?
No. Imagine a stock that's at 50 dollars today (T0). Over the next month it doubles in price and goes to 100 dollars (T1). A month after that its doubled again and the price is now $200 (T2). On a linear chart the difference in price between times T0 and T1 looks much smaller than the difference between times T1 and T2. However, an investor that bought at time T0 and sold and time T1 would have made exactly the same amount as someone that bought at T1 and sold at T2. If this was two different stocks and they had both gone up 100% in the same time frame the linear scale would make the more expensive stock look like a more impressive gain.
Another way to think about it is that you don't really care if a stock moves $x. You care if it moves x%. Logarithmic scales let you visualize this more accurately.
Well the other side of this is that retail investors are usually scared off of the markets because of the last bust. It's only when they start hearing news of dow 20k and how the market is doing well when they start putting their money in. By that time, they're usually the last to the party.
On the other hand, retail investors are probably the least likely to dump money in after a crash, which is the best time (buy low, sell high). Instead they are selling and generally trying to protect capital. Then they stay out until we do it again.
Also in the US we've seen since the 1960s increasing debt percentage across households, corporations and governments, lower wages against different backdrops, and decreased capital re-investment as a percentage of GDP.
Alan Watts talks about how some things in life can be like trying to smooth the waves in the ocean with a flat iron.
I often think of that when it comes to the Fed. I know next to nothing compared to the financial wizards, but it does seem like every major financial crisis started with some marginal movement by the Fed.
I'm not saying there's a better alternative, or necessarily knocking them - I have respect for them. But at times it seems like nobody really knows how the economy works, and each crisis is followed by an, "oops, let's not do that again."
Milton Friedman wrote in "Monetary History of the United States" that the money was more stable when interest rates were set by the blind workings of supply & demand than when the Fed did it, and backed it up with charts and statistics.
"As is clear to the naked eye in Chart 1, the stock of money shows larger fluctuations after 1914 than before 1914 and this is true even if the large wartime increases in the stock of money are excluded. The blind, undesigned, and quasi-automatic working of the gold Standard turned out to produce a greater measure of predictability and regularity—perhaps because its discipline was impersonal and inescapable—than did deliberate and conscious control exercised within institutional arrangements intended to promote monetary stability."
Chart 1 is on page 4 and plots the x axis 1867 to 1960 and the y axis plots deposits and currency, and yeah, it's pretty clear to the naked eye.
Sometimes I wonder if we're looking at another 1929 event.
Lets posit 1929 - in 1929 by most accounts the economy was booming, drive by easy credit and new inventions, a new consumer oriented society was driving buying on credit and speculation in the stock market. But the economy at its core was weak, specifically in the agricultural sector.
Lets Posit today - Uneven recovery from last economic crisis, most of the economy has weak growth, boom of growth in certain markets, weak agricultural commodity pricing.
I see parallels, enough parallels to be concerned really, but not enough to go hide in a hole until its all better. I'm concerned the current administration may not respond full-throatedly enough in the event of a real crisis however.
We've always been looking at another 1929 event, though. In 1987 there was a flash crash and people were worried that we were about to have another crash of '29. In '97 there was the Asian Financial Crisis and people were worried about another '29. In '00 the dot-com bubble was bursting and people were worried that it'd be another crash of '29. In 2007 people saw what was happening in the derivatives market and said "We're in for another crash of '29". Then when the crash actually hit in 2009, people were sure we were in for a double-dip and 2011 would be the new 1929.
I'm worried about another 1929 event, because of the strain of american politics coming to the forefront - the folks who believe in a coolidge-sized government - they could very well sit on their thumbs and dawdle in the event of a market-implosion-event. This is the thing that concerns me mostly.
It feels like the roaring 20's. All this cheap money is subsidizing a lifestyle of well paying jobs, high rent, and cheap Ubers. People want to live in cities where all the jobs are and where all the fun new development is happening so that they can Uber and Lyft to the newest restaurant.
Personally, I love it, and I hope we're just in an era of profound economic growth. But every time I go out and see cranes in the skyline and I see that I just paid six dollars to be driven across town, I can't help but think that none of this is real. It's all just a temporary playground being propped up by cheap VC cash.
VC cash only seems like it's having a large effect on the world because you read Hacker News and work in Tech.
The total value of VC investment in 2015 (the most recent data I could find) was around 60 billion. The US GDP in 2015 was 18,036 Billion. I can assure you its influence on our economy as a whole is miniscule.
You're not wrong about the temporary "propped up" nature of our economy however. Except the cause is not VC money, it's low interest rates courtesy of the Fed.
Well like 1929 the United States is immensely unequal and getting worse.
I believe that what's happening now has to end somehow. And if it doesn't end with a financial crash it may just end with guillotines. We're already watching increasing political instability develop in this country and across the world.
We need to inject money into rural areas to see a real recovery - most of that prosperity you saw in rural america from 1950-1970 was a result of the capital and resources injected by the New Deal.
We're headed for some kind of correction, but it's not at all clear what form it will take. I've been expecting an interest rate spike for years, but that hasn't happened. If we get one, much activity that's been assuming low interest rates will be disrupted. There will be demands for high inflation to relieve debtors.
Tech is already in a correction: VCs have pulled back on capital, unicorns are dying, and folks in this-is-a-terrible-idea startups are getting laid off. It's happening in slow motion because most of these companies are privately funded and they run out of runway at different points in time.
I'm actually betting that in the broader economy, we get a bubble as Trump's tax plan & infrastructure spending kick in and Yellen doesn't pull back on interest rates hard enough, then a short 1-2 year period of absolute mania as SOX & Dodd-Frank are rolled back and ordinary people can invest in the stock market again, there'll be a massive wealth transfer from poor to rich, and then a very hard crash when they run out of suckers. Then the government will panic at the crash, dump money into the economy, and we'll get hyperinflation. Civil unrest follows, with mass protests, a government crackdown, and the eventual disintegration of the U.S. as a nation-state.
Hard to predict the timing of such an involved sequence of events, though. The tax plan is under works right now, and maybe we'll get infrastructure spending in the first year of Trump's presidency. That'd indicate the bubble beginning around late 2018, reaching crescendo just after re-election in 2020, and popping around 2021.
> Civil unrest follows, with mass protests, a government crackdown, and the eventual disintegration of the U.S. as a nation-state.
This is total lunacy if anyone is taking this prediction seriously. Unrest, protests, sure. The United States isn't going anywhere.
It's entirely possible that there will be more QE events to offset what Trump's presidency will do to the US economy, but the country can withstand all sorts of nonsense.
Reforming the tax code as huge implications in extending prosperity to more americans, not just the super wealthy - if anything, the super wealthy will likely loose out the most, they are best able to take advantage of the myriad of loopholes we have now.
No way this thing lasts that long. The generational demographic bottom hits in 2024. We're already so levered that a sneezing tardigrade might throw planets into collision.
A whole lot of debt (more than was issued in all of human history before 2008) must destroyed, very very soon. The longer it is delayed, the worse the disruption will be. Already, we are set for the largest wealth transfer in history, when the Boomer's checks start bouncing in earnest.
"SOX & Dodd-Frank are rolled back and ordinary people can invest in the stock market again".
Anyone can invest in the US market right now. There are some restrictions on investing in hedge funds and VC pools, but both, as a class, are underperforming the public stock market. You want to pay 2 and 20?
Long cryptocurrency, precious metals, and South American farm land. Short sovereign bonds + long TIPS. Short financials (especially southern European), REITs, highly levered retail, luxury goods, auto makers.
Most especially, assiduously avoid everyone who sells debt to buyback shares. Long value and utility + short leverage and hype.
1929 will come when the debt crisis finally happen. Only a mad man can think that we can sustain our way of life by borrowing more indefinitely. I don't know if it's going to be at 150% debt to gdp or perhaps 200%. But one thing is certain, whether it is through hyper-inflation or defaults, lots of people are going to be wiped out.
Every time I bring this up, someone corrects me and says that things aren't the same these days with fiat currency and the way national debt is owed to "ourselves." I don't know enough myself to counter this.
The key idea behind the argument is that money is created by the government as a soft policy-enforcement tool, and it can and does create as much money as it needs to induce its policy choices (by funding them), while raising demand for the currency by raising taxes. (Even if you were paid entirely in "Liberty Dollars" or whatever last year, and have no other need for US dollars, in the US the IRS is going to tax you on the fair market value of your income - and the bill will be due in US dollars. This is a demand-side advantage which no other currency can match, unless it's also backed by a credible military/ police force.)
This means that any debt which comes due and is denominated in the national currency could theoretically be repaid by simply creating more of the currency. Therefore, when a government raises debt denominated in its own currency, it's not trading on the credibility of its currency- denominated national income. That's the key difference from the financing of a typical household or business, which can typically raise debt according to its perceived ability to bring in disposable income. National debt is instead trading on the nation's commitment to refrain from printing money which it can't credibly raise demand for by raising taxes.
I don't understand the tax argument compensating inflation. A large part of the US debt is held outside of the US. As soon as the US will be printing dollars to repay its debt these countries will find themselves holding more dollars/liberty dollars hence the value of the dollar will sink. You can't really tax them.
The argument isn't that you can tax the people holding the debt.
The argument is that you can tax someone who owns valuable assets or productive capacity of some kind. That person will then need to acquire dollars to pay the taxes, boosting demand for dollars.
The trouble arises when 80% of your house is debt-funded, and everyone wants to realize the value of their debt.
Turns out there will be a fair few other people who also think they own your house, and when this happens to a big chunk of the population you get in a lot of trouble.
1929 was not so bad as a recession. We had plenty of those. 1929 was bad in term of how it was handled to exacerbate the problem. The Fed back then drained liquidity out of the economy as a policy. Since then we have learned the lesson. Witness how the Fed handled the 2008 recession by pumping massive liquidity into the economy with QE, which was unheard of before.
One problem in 1929 rarely mentioned is the Fed started inflating the money around 1917, but kept the fixed exchange rate with gold. By 1929, it amounted to a 40% off sale on gold at your local bank. Bank after bank collapsed under the onslaught and this persisted until the government repudiated gold sales and defaulted on the gold bonds.
Fixed exchange rates never, ever work out. There's always a massive correction.
That's a very good point. The gold pegging definitely tied the hands of the Fed back then, as the Fed had to raise interest rate to defend the depletion of gold due to gold redemption.
The Fed also had crazy gold requirements. They were required by law to hold a substantial reserve. But since this reserve was statutory it couldn't be used as a "real reserve," there had to be a reserve atop it. As a consequence the Fed felt it had to move extremely aggressively to protect its own balance sheet by tightening up the money supply very quickly.
What made 1929 a heart stopper was the waves of bank failures between 1929 and 1933, people lost faith in the economic system more than anything, that faith alone is what primes the pump of capitalism, without it very very grave and disastrous things happen.
Well if this Syria thing becomes a WWIII then its going to get much worse than 1929.If we have a nuclear war with the level of weapons we have now we can damage the planet beyond the ability to sustain life of any kind. If this is a "Hollywood War" for show that is well coordinated then we may see startups spring up to take on these lucritive military contracts, but the economy will just shift. With a modern nuclear war the earth will be so damaged it will no longer be able to sustain life of any kind for at least 30 billion years or more. We have enough nukes to wipe out all life on earth many times over within only a 15 minute window.
I'm not well verse in economy but I believe much of what US is today is built on being the global dependency. It's like the JQuery of everyone's economy: too big to fail.
After Trump inarguration, the world got a shock at what a hell of a dependency they got themselves into (bigger shock than 2008). It's like the leftpad fiasco all over again. Any sane politician would by now understand the need to reduce dependency on America. Everyone else are planning a Dodd Frank fix for their economy.
US will really suffer a crisis if the world stop depending on it, if they can afford to ignore America. After TPP was canned, and Trump protectionism approach, that dependency is surely weaken.
If you think about it, China is not even trying to complain about US anymore. That's because they got what they wanted.
But US had a nuclear arsenal, its better for the world if we had this dependency. Trade and economy have kept peace for so long, I hope I don't see an end to this peace.
I think we're yet to see any sort of shock. The markets hit record levels in the U.S. after the Trump election. The entire system is oblivious to anything future related until it's too late. Totally reactive.
If the world doesn't have to depend on the US as a cornerstone of the global economy then the US would be totally irrelevant but for its nuclear capacity.
In my gut, I feel like the same mindset that caused 2000 and 2007 has come together into one that will cause a bubble greater than both. Why do I think that?
1.) After watching 'Big Short', it made me realize that a lot of what causes a bubble is no one asking difficult questions because nobody wants to be 'that guy' who ruins the party.
2.) If Facebook, Uber, or the Pepsi ad is any indication, there are a lot of talented 'yes men' going along with business-as-usual because of self-interest.
3.) Snap is more alarming to me than Tesla. Tesla succeeding with their long-term vision is a much safer bet than Snap is. I know a 'social media influencer' and he recently told me that a lot of his network is leaving Snap for 'more stable platforms with broader demographics'.
4.) The recovery will be very different from the last 2 because AI, robots, and other forms of disruption will swallow up thousands, if not millions, of jobs. Why would executives and shareholders decrease margins for PR? Uber was affected a little by their recent issues but they are already 'back on track' it seems.
All in all, I am 27 and graduated high school when 2007 happened. I was 10 when the 2000 happened. This is the only world I know, one that works in 8 year cycles. 1992 Bill Clinton was elected with 'it's the economy, stupid'.
We are in for quite a ride because fanaticism, corruption, and climate change are all showing up in unexpected ways too. It will all be okay though, suffering builds character.
26, and feeling kind of the same as you. I don't really remember 1999/2000 too well (was too young), but I remember 2007/2008 quite well---my dad got fired from a very well paying job (he was a civil engineer).
All of a sudden, I went from being a reasonably rich high school kid (with a straight path into uni), to someone whose parents had to move homes (we were renting, and had to cut down on expenses, especially since I was off to uni) and whose dad was struggling with depression (even though he didn't know what to call it at the time).
I am still not quite sure how my dad's depression played into the surfacing of my own, smack back in 2010, right in the middle of my first degree (also in civil engineering), but I know the results: I quit civil engineering, and I have been on and off in school ever since, basically thriving on "passion" and my parent's money...
I remember my dad managing a jump from a downsizing TRW in 1971 to a government gig. Which meant the family rode out the double dip recession of 1979/1982 unscathed. However I couldn't find a job myself at all 1982-1983.
Remember being at a small company in 1990-1993 and watching the orders fall and fall. Survived because the owners didn't take a pay check for 2 years. I didn't take a paycheck for 6 months.
Company I worked for in 1997 went under due to the Asian Financial Crisis.
Division I worked for got tossed over board during the 2001-2002 dot bomb. Even though there was nothing dot bomb about what we did.
Somehow managed to come through the 2008 down turn myself, but my GF got laid off, hired, then laid off.
> I am not sure if suffering builds character.
Look at the above to see; suffering is bullshit.
What bothers me is (perhaps I was naive 40 years ago and less so today) but it seems that the political system and the people that control it are committed less and less to having the backs of the general public. Notice that 2009-2011 large banks and insurance companies, private high wealth individuals were bailed out but millions of schmucks lost their homes and small fortunes[1]. And that was a matter of policy.
[1] To avoid moral hazard someone needs to suffer. Just not us seems to the way it works now.
I understand what you mean but also perception is big thing with what I said about suffering. Also, I used that word from a Buddhist/Stoic context and from my life experience testing out those schools of thought.
In 2008, my dad was a shipping clerk for an ATM repair company. He lost his job to a younger, fitter, better English-speaking immigrant that would work for less money in 2010. It broke his spirit but he remade himself in the months after by getting into fitness and somehow is better off today than he was then because he had to find that hunger again. He is also a recovering alcoholic, sober for over 20 years. Proud of him for not using that an excuse to start drinking again. A lot of men would have.
I dropped out of community college and got laid off from Starbucks in Dec 2009. I spent 2010 smoking weed, eating acid, going hiking, chasing girls, and trying to 'save the world'. I was 20, don't judge too harshly. I decided then what I wanted to do with my life, to avoid self-worth shattering ridicule from a community I respect I'll save that for my 'show HN' moment.
The last 7 years of my life have been an uphill struggle to get work experience, master basic life skills, understand subtle dynamics of relationships, and now not accepting failure as an outcome. I've learned to refine my initial concepts and business plans into mathematical proofs supported by a scientific paper (writing now).
I've always been into Buddhism and Stoicism, they resonated with me at 20 and still do today at 27. If you're still wanting to try one more time, I'd suggest starting there and giving college/startup/? another try. There is still time to finish what you started.
That bit came from me thinking about how hard life was for humanity for most of history compared to today. They made it somehow, we have some inconveniences happen to us but it's never been easier to use our circumstances as motivation to learn more and build more.
I don't really know what to do with this news... I mean... do I cancel my 401k, do I sell my house, do I dig a bunker? Recessions come and go, right? What can you do to prepare for the future except keep your debts cleared, keep a certain amount of cash on hand (I like about 6 month's worth), invest the rest as wisely as you can... and y'know... cross your fingers.
There will be ups and downs. Life is long. And this is a depressing topic. (=
The economy's "balance sheet" isn't accounted for the same as the balance sheet of a company or personal finance. Fractional reserve allows a bank to lend out N times more than what it has in saving deposit. With re-deposit of the lent out money, the bank can lend out more, with (N-1)/N times, and so on.
Interest rate acts as a lever to limit the amount of loans people are willing to take. Higher interest rates will force companies to not take on more debt; however, the long term debt they got before with a lower rate is cheaper now compared to new debt so they would keep those.
> Money creation in practice differs from some popular misconceptions — banks do not act simply
as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’
central bank money to create new loans and deposits.
> The reality of how money is created today differs from the
description found in some economics textbooks:
> • Rather than banks receiving deposits when households
save and then lending them out, bank lending creates
deposits.
> • In normal times, the central bank does not fix the amount
of money in circulation, nor is central bank money
‘multiplied up’ into more loans and deposits.
> In fact, when households choose to save more money in bank
accounts, those deposits come simply at the expense of
deposits that would have otherwise gone to companies in
payment for goods and services. Saving does not by itself
increase the deposits or ‘funds available’ for banks to lend.
Indeed, viewing banks simply as intermediaries ignores the fact
that, in reality in the modern economy, commercial banks are
the creators of deposit money
> Another common misconception is that the central bank
determines the quantity of loans and deposits in the
economy by controlling the quantity of central bank money
— the so-called ‘money multiplier’ approach.
> ...
> While the money multiplier theory can be a useful way of
introducing money and banking in economic textbooks, it is
not an accurate description of how money is created in reality
> In reality, neither are reserves a binding constraint on lending,
nor does the central bank fix the amount of reserves that are
available.
I was mainly talking about the U.S. reserve system. While U.K. has no reserve requirement, it has the capital requirement [1], which serves the same purpose to limit the maximum theoretical amount of money in the system. Of course interest rate is used to further control the amount of money below the maximum theoretical limit since interest rate is an easier tool to use than the reserve/capital requirement.
You've hit the nail on the head with interest rates going up. More than that, many companies have been taking out debt to buy back shares of their company on the public market at recent prices. If the value of those purchased shares go down, that could also be trouble.
Even with reserve banking though, banks do increase the money supply but a banks assets are still always equal to its liabilities. Someone still needs to loan the money to these more indebted companies. Who is doing the additional lending?
Simplified scenario. Bank's liability is the deposit people put in the bank. Bank's asset is its deposited cash. When people deposit money, the bank's liability and asset increase by the same amount.
When the bank lends out a loan of X amount as cash, its asset is deducted with X cash, but it would book the loan as asset as well since the borrower owes the bank X cash. Everything balances out.
When the bank lends out a loan of Y amount as fund in the borrower's account in the bank, the bank's liability increases by Y since Y has been deposited into the customer's account. At the same time, the bank's asset increases by Y since the bank receives the borrowed money under the customer name into its cash pile. Everything balances out.
Afterward when the customer withdraws the borrowed money out of his deposit account, it decreases the liability and asset of the bank at the same time.
Debt is created ex nihilo from the banking sector, so no real savings (that is, foregone consumption) needs to match it. The only thing constraining debt in our system is the capacity of the economy to meet the ongoing payments. (If we had duration matched savings then debt would much more closely correspond to savings and there would be no danger of runs on the banking system.)
When rates double it will be an economic catastrophe.
Your exactly right... savings and debt are always exactly balances with the small exception of the gold that is still sitting on the Federal Reserves balanace sheet.
Currently the savings and debt dynamics are skewed with a large amount of savings being held or controlled by very high net worth individuals and the debt being held widely. These situations have always in the past resulted in deflationary periods like we saw in the 1890's 1929 and recently in 2008.
The current economy is a lot like the old company store in mining towns where everyone is in debt to the company store and the only things that you can buy are what the company store sells.
Is it any wonder that the hottest consumption items are the sectors of the economy that are financed?
This stuff is rather difficult to trace; people surveying global assets vs global liabilities find over a trillion dollars of difference where there should be none.
> Maybe I don't have a full understanding- but economywide, the amount of debt and savings has to be equal, right?
Only if you assume the total amount of currency in the system is fixed. If some of it gets destroyed (cash burned in fire) then you can easily have debt grow more than savings because the destruction of the currency doesn't destroy the debt.
This also assumes that the debt has the same growth (interest) as the savings (also interest). If the debt has higher interest on it and isn't defaulted on, then the debt can also easily grow to above the level of savings.
Now that happening does mean that the debt can't be paid off with savings as it is now, so you need to be able to generate enough value/profit/product to be able to keep paying the principle down and even though the savings isn't enough to wipe it out the debt still isn't necessarily uncontrollable. That said there's got to be a tipping point where you can no longer keep that up and there will eventually be no choice but to default on that debt and then all kinds of hell breaks loose because that hasn't happened very often in modern economies so nobody really knows how to handle it.
I understand the basics of the Shiller PE but what effect does the fact that so many companies are keeping their earnings overseas in Ireland, etc. have on this?
Two years ago was a bad bet, based on market momentum. Winter 2016 was a good bet based on market momentum. Then the election happened and the market inexplicably took off.
Then, one day years later, after they've lost out on ridiculous gains waiting for the "big drop," they learn that when looking at a historical market chart to switch from linear to logarithmic scale.
Suddenly the crazy recent capitulations just look part of a steady climb with minuscule blips along the way. Go ahead and try it on Google Finance with the S&P. You'll be amazed.
edit Changed 'exponential' to avoid confusion