Tuesday, December 1, 2009

Equities Lost Decade

BusinessWeek with the details:

With the '00s about to flip the odometer to the '10s, there has been a raft of commentary about how lousy a decade this has been. Stock investors can vouch for that: The ten years since Y2K are on track to produce the worst total returns for investors since the 1930s. And, after the roaring '80s and '90s, the disappointment of the last decade is all the more galling.

Indeed, it will be hard for investors to wash the taste of trillions of dollars of losses from their mouths.

In both the 1980s and the 1990s, the broad S&P 500-stock index index provided a total return (which includes dividends) of more than 400%, according to Capital IQ, a Standard & Poor's business. The total return for the S&P 500 since New Years 2000 has been negative 10.8%.

In looking at the chart, doesn't it appear the 80's and 90's were just as much outliers (and the reason for the RICH valuation at the beginning of the decade) as the 00's?

Source: ICMARC


  1. Cool idea, is it possible to filter by infation ie CPI. Since we are looking at long swaths of time, 10 years, inflation definitely rears its head in a relative sense, no? rr

  2. some slightly stale data for this decade, but you get the idea...


  3. I think we are very close to a multi-year top in many stock markets around the world in part because of all of the misstepts by governments to try to control the business cycle and disrupt the free market. But fortunately there are still some individual names I like going forward because of what the govt is doing to try to help the economy. One gold mining company that I particularly like is Premier Gold because it offers a lot of leverage to the gold price. There is a good article here called Premier Gold Aims for Multi-Million Ounce Deposit at Hardrock which discusses one of the gold mining company's recent high grade gold discoveries at its Hardrock project in Canada. I wouldn't necessarily step up and buy the stock today, but I definitely would would on a 5-10% pullback. I believe that the macroeconomic situation is going to remain extremely positive for gold over the next several years because of the deflationary threats of the credit crisis and the inflationary policies of the Federal Reserve in trying to combat these risks.

  4. To point out what should be kind of obvious: One thing the chart proves is how arbitrary the nice, even cutpoints are. After all, time is a continuum, and there's nothing magic about 1/1/2000. Start your decades on Oct. 1992/2002/etc. (just to pick a different arbitrary point) and the picture looks remarkably different.

  5. oh
    thats great.we all are just acquainted with stock markets around the world.it denotes our economy.thanks.car rental.