S&P 500 companies earn 20% stated return on equity but only 12-13% return on capital due to high levels of debt in the capital structure; additionally, much of capital allocation at index companies goes to share buybacks at high multiples, which shrinks equity without creating proportional gains, reducing true reinvestment returns.
causalpending
Speaker
Chris MeredithEvidence Quote
“the S&P 500 in aggregate earn 20% on equity... the return on capital gets shaved way back because there's as much debt in the capital structure as there is equity... the S&P earns 12 or 13 on capital.”
Source
We Asked Chris Bloomstran Why He Won’t Own the S&P 500 At These Levels — And What He Does Instead— Excess ReturnsCreated: 8/12/2026, 6:13:17 PM
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