The first decade of the new millennium is known to US investors as a lost decade. Investors experienced two dramatic market crashes following the 1990s Internet bubble and the 2000s housing bubble. Even with the help of money printing from the US government, the investment return of the broad market as measured by the S&P 500 is just barely positive since January of 2000. As of today, the S&P 500 index itself is still 13% below its starting point at 2000. The positive overall market returns are mainly from the dividends of the S&P 500, which currently yield at a level of less than 1.8%.
If the picture is not gloomy enough, ask the foreign investors who have invested in the US market over the past decade. Since the last time the US had a budget surplus in 2000, the US dollar has lost value against all major foreign currencies. For instance, if an Australian investor converted 100 Australian dollars into US dollars at the beginning of 2000, he’d receive $65 US dollars. If he did nothing with the money and converted back to the Australian dollar now, his original $100 would become $62.1. He would lose 37.9% due to the devaluation of US dollars. As we mentioned above, the S&P 500 index itself lost 13% since January 2000. Therefore, what the Australian investor sees is that the index lost a combination of 13% in the stock market and 37.9% in US dollar devaluation, which resulted in a loss of close to 50%.
The situation is similar for investors from Japan, any euro zone countries, Canada, Switzerland and even China. Swiss investors lost the most among all because they had the strongest currency. China has pegged its currency with the US dollar for most of the past decade. But its currency still appreciated 23% against the US dollar.
Switzerland had the strongest currency among all the countries mentioned above. According to the website of The Committee for a Responsible Federal Budget of Switzerland: After years of rising deficits and debt in the 1990s, Switzerland's citizens adopted the debt brake as a constitutional amendment in 2001 (with 85% approval!) The rule was to be implemented starting in 2003. It stated that each year, the budget must be in balance, adjusted for economic conditions. They do this adjustment by multiplying expenditures by a cyclical factor (the ratio of trend real GDP to expected real GDP), thus either allowing for deficits during recessions or forcing lawmakers to have surpluses during booms. Essentially, the rule calls for structural balance in each year and absolute balance over the course of a business cycle. So if lawmakers want to have expansionary fiscal policy during recessions, they need to pay for it by saving up during good economic times.
Since then Switzerland has cut government spending by half, is running on surplus, and has reduced its national debt, which now stands at only 38.2% of the GDP.
The return is much better for British investors, especially in the last five years, as the country faces a similar budget problem and its currency weakened.
GuruFocus has calculated the performance of the US market in foreign currencies since 2000 and will update the data daily.
This is the chart for return in percentages in foreign currencies since 2000:
The detailed return (cumulative) numbers of the S&P 500 since 2000 are listed in the table below.
What can investors learn from this? We should look more globally for investment ideas. Practice value investing with a global view. US investors may even benefit from a weak dollar when investing in international companies.
While it is hard to predict the movement of exchange rates for foreign currencies, over the long term, the countries with higher growth rates and disciplined government spending will have strong currencies. With an alarming level of national debt, reckless federal spending, accelerating national debt increases and grid-lock in Washington, we know the US is not one of them.
Maybe that is also one of the reasons why Warren Buffett has been investing much more in international stocks. He bought large stakes in foreign companies in the last several years, including German reinsurer Munich Re, Swiss reinsurer Swiss Re, French Pharma giant Sanofi-Aventis (SNY), British retailer Tesco (TSCDF.PK), Korean steel company Posco (PKX) and Chinese carmaker BYD (BYDDY.PK). For details, go to international stocks in Berkshire Hathaway’s equity portfolio, or check out Warren Buffett’s international stocks. For more ideas on international stocks, check out where to find value ideas for international stocks.
GuruFocus will calculate the returns of US market in foreign currencies daily, and the information will be filed under Home => Market in Foreign Currencies.
If the picture is not gloomy enough, ask the foreign investors who have invested in the US market over the past decade. Since the last time the US had a budget surplus in 2000, the US dollar has lost value against all major foreign currencies. For instance, if an Australian investor converted 100 Australian dollars into US dollars at the beginning of 2000, he’d receive $65 US dollars. If he did nothing with the money and converted back to the Australian dollar now, his original $100 would become $62.1. He would lose 37.9% due to the devaluation of US dollars. As we mentioned above, the S&P 500 index itself lost 13% since January 2000. Therefore, what the Australian investor sees is that the index lost a combination of 13% in the stock market and 37.9% in US dollar devaluation, which resulted in a loss of close to 50%.
The situation is similar for investors from Japan, any euro zone countries, Canada, Switzerland and even China. Swiss investors lost the most among all because they had the strongest currency. China has pegged its currency with the US dollar for most of the past decade. But its currency still appreciated 23% against the US dollar.
Switzerland had the strongest currency among all the countries mentioned above. According to the website of The Committee for a Responsible Federal Budget of Switzerland: After years of rising deficits and debt in the 1990s, Switzerland's citizens adopted the debt brake as a constitutional amendment in 2001 (with 85% approval!) The rule was to be implemented starting in 2003. It stated that each year, the budget must be in balance, adjusted for economic conditions. They do this adjustment by multiplying expenditures by a cyclical factor (the ratio of trend real GDP to expected real GDP), thus either allowing for deficits during recessions or forcing lawmakers to have surpluses during booms. Essentially, the rule calls for structural balance in each year and absolute balance over the course of a business cycle. So if lawmakers want to have expansionary fiscal policy during recessions, they need to pay for it by saving up during good economic times.
Since then Switzerland has cut government spending by half, is running on surplus, and has reduced its national debt, which now stands at only 38.2% of the GDP.
The return is much better for British investors, especially in the last five years, as the country faces a similar budget problem and its currency weakened.
GuruFocus has calculated the performance of the US market in foreign currencies since 2000 and will update the data daily.
This is the chart for return in percentages in foreign currencies since 2000:
The detailed return (cumulative) numbers of the S&P 500 since 2000 are listed in the table below.
| S&P500 in World Currencies | Current Value | YTD Return (%) | 12 Months Return (%) | 3-Year Return (%) | 5-Year Return (%) | 10-Year Return (%) | Since Jan. 1, 2000 |
| USA (US Dollar) | 1278.36 | 1.6 | 14.4 | -3 | 3.1 | 4.5 | -13 |
| Australia (AUD) | 1205.24 | -3 | -6.2 | -12.7 | -28.3 | -48.9 | -46.2 |
| Canada(CAD) | 1251 | -0.6 | 9.4 | -6.7 | -9.6 | -33.2 | -41 |
| China (CNY) | 8281.73 | -0.2 | 8.6 | -8.7 | -16.5 | -18.2 | -31.9 |
| Switzerland (CHF) | 1079.19 | -8.4 | -13.1 | -20.9 | -29.8 | -50.8 | -53.9 |
| EuroZone (EUR) | 893.45 | -5.8 | -1.2 | 5.9 | -9.5 | -37.9 | -38.8 |
| Great Britain (GBP) | 787.85 | -3.6 | 4.3 | 17.9 | 16.8 | -10.2 | -13.4 |
| Japan (JPY) | 102556.43 | -0.2 | 1.1 | -27.6 | -28.1 | -32 | -31.7 |
What can investors learn from this? We should look more globally for investment ideas. Practice value investing with a global view. US investors may even benefit from a weak dollar when investing in international companies.
While it is hard to predict the movement of exchange rates for foreign currencies, over the long term, the countries with higher growth rates and disciplined government spending will have strong currencies. With an alarming level of national debt, reckless federal spending, accelerating national debt increases and grid-lock in Washington, we know the US is not one of them.
Maybe that is also one of the reasons why Warren Buffett has been investing much more in international stocks. He bought large stakes in foreign companies in the last several years, including German reinsurer Munich Re, Swiss reinsurer Swiss Re, French Pharma giant Sanofi-Aventis (SNY), British retailer Tesco (TSCDF.PK), Korean steel company Posco (PKX) and Chinese carmaker BYD (BYDDY.PK). For details, go to international stocks in Berkshire Hathaway’s equity portfolio, or check out Warren Buffett’s international stocks. For more ideas on international stocks, check out where to find value ideas for international stocks.
GuruFocus will calculate the returns of US market in foreign currencies daily, and the information will be filed under Home => Market in Foreign Currencies.
