We created a new page on recent stock market history since Covid as summary/timeline of market events & their causality.

Brief History of Stock Markets since covid

Why This Page Exists — A Brief Reflection on Market History Since COVID

Market history doesn’t repeat, but it rhymes.
Every cycle is different, yet human behavior, policy reactions, liquidity cycles, and risk appetite create patterns that echo the past.

What You’ll Realize When You Zoom Out

1. Stocks are risk assets — and the risk premium matters

Equities represent the present value of future cash flows from businesses. Unlike bondholders, shareholders have no contractual rights to cashflows or assets.
Because they sit last in the capital stack, they earn higher expected returns — the equity risk premium.

2. The U.S. market goes up over time for one simple reason: earnings grow

There is no magic in the S&P 500 rising over decades.
The long-term chart of the S&P 500 and the long-term trend of S&P 500 earnings per share are almost perfectly correlated.

Prices follow earnings.
Earnings follow productivity, innovation, demographics, and capital investment.

3. For earnings to keep growing, the macro environment must be stable

Macro certainty, rule of law, and a stable socio-political environment support long-term capital investment.
This stability determines how much investors are willing to pay for every dollar of earnings — the market multiple.

When stability rises → multiples expand.
When uncertainty rises → multiples contract.

4. Inflation is the market’s biggest enemy

Markets dislike macro uncertainty, but they hate inflation even more.
Historically:

• Inflation above ~5% almost always leads to P/E multiple contraction,
• regardless of earnings growth.

High inflation → higher discount rates → lower present value → lower market multiples.

Stocks are risk assets valued as sum of present value of future cash flows of businesses. Unlike bonds there is no contractual obligation on distribution of cashflows or assets or dividends. Therefore stock investors higher yield than bond holders of the same company.

• The only thing that makes US markets keep going up in earnings growth. This isnt magic. SP500 charts over long term is perfectly correlated to SP500 eps. (famous
• For the earnings to keep growing, one needs to look out for macro certainity & stable socio political environment. (This factor contracts or expands the multiple)
• More than Macro uncertainity markets dont like inflation. Inflation above 5% always brings down markets multiple.(This factor contracts or expands the multiple)

Nice day & Happy reading !!