Monday, October 24, 2011

11% Equity Rally Can't Keep Pace With Oil

As discussed previously, the S&P 500 could be on pace to break a multi decade record for largest gain in a single month.  Even though stocks are up almost 11% for October though, measured in terms of oil, financial assets haven't made the average holder any wealthier.  Below is the ratio of the S&P 500 to the price of a barrel of Brent Crude oil.  One could also describe this relationship as the number of barrels of oil that one "S&P 500" could buy.  Today, the number is 11, which is pretty much exactly where it was at the beginning of the month.

Click to Enlarge
If the dollar value of a portfolio rises, but you can't buy more "stuff" with it, then what's the point?

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