Episode 1441: A Treadmill Market: Feeling Good while Going Nowhere

Today's Post - https://bahnsen.co/3TYkoXw

David Bahnsen explains how range-bound, volatile markets can feel productive yet deliver flat or mediocre returns over long stretches, citing the S&P 500 from 2000–2009 (about -0.9%/year with dividends) and the Dow from 1966–1981 (flat on price but roughly 4–4.5%/year with dividends). He notes periods when dividends comprise most or all of total return, but shifts to today’s math: recent S&P gains (about 15% annualized over 15 years and 22.9% over three) imply either a higher long-run average or future below-mean returns via sharp declines or prolonged choppiness. Applying this to AI, he highlights NVIDIA’s flat year despite strong fundamentals, with Palantir down 7% and CoreWeave down ~60% amid 100% revenue growth, arguing that unknowability, capital constraints, and high valuations can yield unsatisfying stock returns even if AI succeeds, and he advocates dividend growth as a way to navigate volatility and reduce left-tail risk.

00:00 Welcome and Setup

02:21 Why Flat Feels Busy

03:33 Lost Decade S&P 2000s

05:58 Sideways Seventies Dow

07:29 Dividends Matter Most

09:21 Mean Reversion Math

11:44 AI Poster Child Nvidia

13:42 Flat Stocks Despite Growth

16:21 Capital Risks and CapEx

22:24 Unknowability Meets Valuation

24:25 Dividend Growth Solution

26:12 Closing Thoughts

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com