      Musings on Markets · 2025-01-17
      · 503d
    

US Equity Valuation Analysis: 2024 Performance and 2025 Market Outlook

Analysis of US equity market performance in 2024, showing 24.88% total returns (ranked 27th best year historically) and combined 2023-2024 returns of 57.42%. The article examines current valuation metrics including PE ratios at 24.16 (above historical averages), earnings yields, and equity risk premiums to assess market positioning entering 2025.

19 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

10-Year Treasury Return 2024

-1.64%

full year

negative due to rising rates

3-Month Treasury Return 2024

4.97%

averaged over 2024

risk-free rate

Best Year in History

52.56%

1954

1928-2024 historical returns

December 2024 Return

-2.50%

monthly return

S&P 500

Historical Equity Risk Premium (Arithmetic)

5.44%

mean, 1928-2024

over treasury bills

Historical Equity Risk Premium (Geometric)

7.00%

geometric mean, 1928-2024

over treasury bills

Mean Annual Return (1928-2024)

11.79%

mean

97 years of S&P 500

Median Annual Return (1928-2024)

14.82%

median

97 years of S&P 500

Positive Return Years

71years

out of 97

1928-2024

S&P 500 Dividend Yield

1.57%

based on expected 2025 dividends

at start of 2025

S&P 500 Price Appreciation 2024

23.31%

excluding dividends

annual return

S&P 500 Total Return 2024

24.88%

inclusive of dividends

annual return

Standard Error of ERP

2.12%

confidence range ±4%

97-year historical average

Trailing PE Ratio S&P 500

24.16ratio

at start of 2025

aggregate index

Two-Year Cumulative Return (2023-2024)

57.42%

S&P 500 total return

historical ranking: top 10 two-year periods

US Equity Market Share

49%

of global capitalization

start of 2025

US Market Share 2023 Start

42%

of global capitalization

baseline

US Market Share 2024 Start

44%

of global capitalization

mid-period

Worst Year in History

-43.84%

1931

1928-2024 historical returns