Living With Stock Valuations
Living With Stock Valuations:What It Feels Like for Investors Over the Last 10 Years
Living With Stock Valuations: What It Feels Like for Investors Over the Last 10 Years
Living with stock valuations, For the average U.S. consumer, inflation has been a steady drain on purchasing power. But for investors, the story has been different: stock prices have soared, often far outpacing wages and inflation. On paper, the last decade has been one of the strongest in stock market history, with the S&P 500 rising from around 2,050 in 2015 to over 6,400 in 2025. That’s more than a 190% gain in nominal terms.
1. The Rise of the Market vs. The Value of a Dollar
In the same decade, the U.S. dollar lost nearly 30% of its value due to inflation.
That means while stock portfolios doubled, the “real” purchasing power of those gains was reduced. A $100,000 portfolio in 2015 that grew to $260,000 by 2025 doesn’t feel like $260,000—it feels more like $180,000 after accounting for inflation.
Feeling: excitement at seeing balances rise, but frustration when those gains don’t stretch as far in real life.
2. Price-to-Earnings Ratios: The Sense of “Overpaying”
Historically, the S&P 500’s price-to-earnings (P/E) ratio averages around 16. By 2025, it hovers above 24–26, signaling stocks are more expensive relative to company earnings.
For long-term investors, this means paying more for every dollar of profit companies generate.
For new investors, it feels like stepping onto a moving train—you’re not buying cheap, you’re buying into lofty valuations.
Feeling: nervousness about investing at “the top,” but also fear of missing out (FOMO).
3. Wages vs. Wealth Creation
Median U.S. wages rose about 40% in the last decade.
The stock market rose more than 190%.
Housing, healthcare, and education costs outpaced both.
Feeling: envy and pressure. Those with capital in the markets saw significant wealth creation, while those living paycheck-to-paycheck felt left behind, unable to “catch the wave.”
4. The Tech Surge and Bubbles
Much of the market’s growth has been concentrated in Big Tech: Apple, Microsoft, Amazon, Nvidia, and Google. Nvidia alone grew more than 1,000% in just five years.
For investors in these companies, it has felt like a windfall.
For those who missed out, it reinforces the divide between “in the know” investors and the average 401(k) saver.
Feeling: exhilaration for some, regret for others.
5. The Disconnect Between Stocks and Real Life
The stock market often celebrates record highs, yet many consumers don’t feel richer. That’s because:
Gas, rent, and groceries don’t care that the S&P 500 is booming.
Retirement savers can’t spend stock gains without selling and facing taxes.
Inflation erodes gains before they can be enjoyed.
Feeling: dissonance—wealth on paper vs. strain in daily life.
6. The Emotional Landscape of Investing
For the average consumer, the last 10 years of stock valuations have brought mixed emotions:
Relief that retirement accounts are growing.
Anxiety that stocks are overvalued and a crash could wipe out savings.
Frustration that while markets thrive, real-world costs keep climbing.
It’s a push-and-pull between optimism about the future and caution about unsustainable trends.
Our Take:
Over the last decade, stock valuations have soared to levels that make investors both hopeful and uneasy. The gains have been undeniable, but when compared with inflation and wages, the picture is more complicated. Consumers see rising balances in investment accounts, but they also feel the sting of higher living costs and the anxiety of entering markets at historically high valuations.
For many, it feels like two economies at once: one of paper wealth and market highs, and another of shrinking purchasing power in everyday life.