The Stock Market's Record Highs Are an Illusion When Measured in Real Value—Here’s Why That Matters
The headlines are shouting it from the rooftops: the S&P 500 and home prices are hitting all-time highs. But here’s where it gets controversial—what if I told you this so-called 'everything rally' vanishes when you measure it in terms of hard assets like Bitcoin or gold instead of dollars? If you’re scratching your head, you’re not alone. Let’s break it down.
In dollar terms, it feels like we’re living in a golden age of wealth. Stocks, real estate, you name it—nearly every asset class is soaring. But this is the part most people miss: that wealth isn’t as real as it seems. Once you adjust for the dollar’s shrinking purchasing power, the picture looks very different.
Since 2020, the U.S. dollar has lost over 20% of its purchasing power, while inflation has surged by 25%. Meanwhile, the S&P 500 has climbed 106%, and home prices—as tracked by the S&P Case-Shiller Index—have jumped 52%. Sounds impressive, right? But when you measure these gains in Bitcoin, the S&P 500 has actually collapsed, and even in gold terms, it’s still down 13%. Home prices fare no better when denominated in these hard assets.
This disconnect explains why so many Americans still feel pessimistic about the economy. Yes, prices are up, but so is the cost of everything else. The record highs we’re celebrating are partly a mirage, inflated by a weakening dollar rather than genuine value creation.
And this isn’t a new phenomenon, though most global investors haven’t caught on yet. Just last week, JPMorgan strategists, led by Nikolaos Panigirtzoglou, highlighted the 'debasement trade'—the rise of gold and Bitcoin as governments rack up deficits, inflation persists, and faith in fiat currencies wanes. It’s a bold statement, but the data backs it up.
Retail investors are pouring money into hard-asset ETFs, while institutional players are lagging. This suggests the shift toward tangible value is happening from the ground up, not the top down. Equity and property investors have managed to outpace currency debasement over the past five years, but will that trend continue? That’s the million-dollar question—or should I say, the million-Bitcoin question?
Markets will keep hitting nominal highs, but the debasement trade—now officially recognized by JPMorgan—is just putting a name to what’s been happening for years. As long as the U.S. dollar remains in a structural bear market, asset prices will feel stronger than they truly are. But here’s the real question: Are we building wealth, or just chasing an illusion? Let’s discuss in the comments—do you think the current rally is sustainable, or is it all just smoke and mirrors?
