Is Buying The S&P 500 a Gamble?

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Only if you beleave that the average company in the S&P will genereate less than -5% sales growth annually over the next five years. The graph below displays the historical market implied sales growth for the S&P for the past 10 years.  Even in 2002, the market did not forecast negative sales growth for the typical firm in the S&P 500.  Today, the market is calling for these firms to deliver -5% annual sales growth over the next 5 years - indicating that the typical S&P 500 firm will be over 25% smaller 5 years from now!  If you believe that is too pessimistic, this is a good time to think about adding stocks to your portfolio.

We have calculated the implied sales growth rates for all the industrial/service firms in the S&P 500.  Read our "Then and Now" study and download a list of stocks that may have been overly punished.
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