This Analyst Says A Full Reversion to the Mean Would Take the S&P 500 From 7,000 to 2,500
A veteran portfolio manager pulled out a century-long logarithmic chart and pointed to where the S&P 500 sits today, then explained why that picture changes everything about how you should think about risk depending on your age.
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Lance Roberts, who runs money at RIA Advisors and writes the Real Investment Report, sat down with host Adam Taggart on Thoughtful Money and argued the S&P 500 is so far above its long-term logarithmic trend that a full reversion would carry the index from 7,000 back to about 2,500.
The argument is more interesting than the shock value suggests.
The SPDR S&P 500 ETF (NYSEARCA:SPY) closed at $764.29 on September 11, 2026, up 12.08% year to date and 16.22% over the trailing year. Roberts is not calling for a crash next quarter.
Roberts’s Trend-Line Claim
Roberts anchored his warning to work from Ned Davis Research, saying the market has not been this extended above its long-term logarithmic trend since 2000. Reversion to a long-term trend is not the same as a price target with a date attached. Trend lines drift upward with earnings and inflation, so the reversion level itself rises over time even if the index falls to meet it.
Roberts’s projected path to roughly 2,500 assumes the reversion happens quickly and completely, which historically is the exception rather than the rule. Reversions usually take years and often unfold through sideways action rather than a single decline.
The valuation signal is the useful part. It tells you the starting point for future returns is unusually high, and Roberts warned that “when you start up here, your forward returns aren’t great every single time.”
Why the Size Matters
Taggart pressed Roberts on the word correction, noting that it can mean anything from a 10% pullback to a generational drawdown. Roberts answered that even a decline of the magnitude he described would still technically qualify as a bull market correction given how stretched valuations already are.
That answer describes the present. It says today’s prices sit so far above trend that a very large percentage move down would still leave the index inside its longer secular uptrend.
The top of SPY reflects that stretch. NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) at 7.58%, Apple (NASDAQ:AAPL) at 6.66%, Microsoft (NASDAQ:MSFT) at 4.91%, Amazon (NASDAQ:AMZN) at 3.64%, and Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) two share classes combined mean a handful of megacap technology names drive the fund’s outcome. Concentration has powered the ETF’s ten-year return of 258.43%, and it is also the mechanism through which a valuation reset in a few names would show up across the whole index.
Horizon Matters More Than Timing
Roberts drew a sharp line between two readers. In his framing, short-term traders can stay long when momentum and liquidity are favorable, while long-horizon investors are better served by treating “protection of capital” as the priority, according to Thoughtful Money with Adam Taggart.
Both statements can be true at once because they describe different jobs. A trader is compensated for participating in the current trend, and a retiree drawing down a portfolio is compensated for not being wiped out during a decade of poor returns. A 25-year-old contributing every payday actually benefits from lower prices, since each contribution buys more shares.
A 65-year-old selling shares to fund living expenses faces the same decline as permanent damage to the withdrawal base, which planners call sequence-of-returns risk (we walked through how to defend the opening years of retirement in a free guide here: The First Five Years).
The alternatives are concrete today. The 52-week Treasury bill yielded 4.23% on September 11, 2026, and the 10-year Treasury sat at 4.95% on September 10, 2026, offering a government-backed return that competes directly with equity risk premiums.
Historical Parallels
Roberts pointed to three secular stretches as reference points: the Depression era, the 1960s and 1970s, and the dot-com bust that extended through 2013. Each produced roughly flat nominal index returns punctuated by sharp rallies and equally sharp declines. Investors who kept buying through them ended up fine, and investors who needed to sell into them often did not.
The VIX at 17.84 on September 10, 2026 sits within its normal range, so the current market is not pricing meaningful stress. That aligns with Roberts’s view that the danger lies in valuation and horizon rather than imminent volatility. Indexes can go a very long time without making progress, and averaging in during those stretches works only if you can keep averaging in.
Is SPY a Buy?
SPY is the cleanest, cheapest way to own the U.S. large-cap market, with a 0.0945% expense ratio and unmatched liquidity. For a young saver with a two-decade contribution runway, it remains a reasonable core holding because time neutralizes the entry-price problem Roberts described.
For an investor within ten years of drawing income, the calculus is different. Shorter-duration Treasuries at roughly 4% yields, a tilt toward lower-multiple sectors, or simply slowing the pace of new contributions each carries its own tradeoffs, including reinvestment risk and the possibility of missing further upside. Weighing Roberts’s warning against the fund’s structural advantages, SPY rates a Hold at current levels. Existing positions look defensible, while new full-size purchases at these valuations deserve more caution than the last five years’ returns would suggest, especially considering oil prices.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
