Can someone confirm the validity of this? Lost Decade for Stocks? posted on: March 09, 2008 Bespoke Investment Group lf you were fortunate enough to buy the S&P 500 at the very bottom in October 2002, your investment would be up 68%. Unfortunately but most likely, 99% of investors didn't buy at the bottom. Instead, investors probably worked their way into long positions in 2003 and 2004 once the market proved it could sustain a clear uptrend. Below we highlight the returns of an investment in the S&P 500 if you bought at the start of each year and held until now. As shown, unless you bought at the start of 2003, you'd have gains of less than 20% in all instances. And buying at the start of 2007 and 2008 would have resulted in negative returns. Now, we're all familiar with the long-term historical performance of 6% to 8% annually for equities, but even during the most recent bull market of this decade, that hasn't happened unless you're timing was spot on. Any new market participants over the past few years have really just seen a lot of back and forth action. Below we highlight the returns of the Dow Jones Industrial Average by decade since 1900 (using 1901-1910, 1911-1920, etc.). At current levels, the Dow is up 12% since the start of this decade. That makes this the worst performing period since the 1930s, even worse than the 1970s (which many people would like to forget).
if no adjustments for inflation are made one can't properly compare performance over different decades imho.
It would be interesting to see how this decade's performance of the Dow would compare to the 1930's if adjusted for the value of the dollar. Maverick
Agree Shortie. Mark Boucher has a great article over on themoneyblogs.com where he looks at the value of the S*P500 priced in Dollars over the last several years versus the same priced in Euro's.
Here's a chart illustrating the PE ratio over the decades. From the look of it we are in for about a decade of consolidation.