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Do the lessons of history suggest that there could be better years to come for the U.S. stock market?

October 27, 2008

Could we be approaching a so-called “lost decade” for stocks — one in which equity returns for the previous 10 years were flat or negligible? If we are, it is an occurrence that happens very infrequently.

In fact, in the 20th century there were only two periods in which rolling 10-year annual total returns fell below today’s 3.06% level: one that began with the Great Depression and one in the decade that ended with the recession of the mid-1970s.

The major market downturns that bottomed in these lost decades of the 20th century are highlighted in the chart below. It also shows that long-term investors who remained invested in the market were rewarded with better rolling 10-Year annual total returns in the years that followed.

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Rating: 2.7/5 (10 votes)

Comments

gav_sharma
Gav_sharma - 5 years ago
Bill Miller: Knowing that this guy beat the market for 15yrs gives me inspiration to try stock picking myself............if he can anyone can. His concept of value is so lame that if ben graham was alive he would personally make sure that he is not called a value investor.....

Max7777
Max7777 premium member - 5 years ago
Yes this historical fact is very nice, but if you take into account inflation, which you should since this is real money we are talking about then it gets worst you also have the case of the second largest world economy: Japan, now at a 26 year low and way more than 30 year low if you look at inflation adjusted data.. so here is very nice country with hard working people that had a case of bad banking crisis and eco going south at the same time and 3 decades lost.. and still counting

Now, I do not think this is going to happen to us, and i have started buying stock again last week, but we can not rule it out yet.. nothing is off the table

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