The "Lost Decade" and Long-Term Real Stock Returns

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SimpleGift
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The "Lost Decade" and Long-Term Real Stock Returns

Post by SimpleGift » Fri Aug 02, 2013 8:31 am

For over a month now, the S&P 500 has been trading in a range at or above its March, 2000 peak, which it first surpassed back in June (inflation-adjusted, total returns, red line in chart). Perhaps it's time to put the narrative of the "lost decade" behind us?

Image
Source: Doug Short

Much more relevant for long-term investors is this second chart, showing 30-year rolling returns for the S&P Composite since 1871 (again, real total returns, red line in chart). It's notable that the U.S. stock market has experienced 30-year real returns in the 2%-4% range for extended periods in its history — so even today's modest forward real return expectations (in the 4%-6% range) are not a given. Finally, for the record, today's 30-year trailing real total return, including the "lost decade," is over 7%, a bit more than the long-term average.

Image
Source: Doug Short

PS. For those wanting to explore the actual data over various time frames, both nominal and real, see this nifty S&P 500 calculator. It also has another version that allows you to add a fixed monthly contribution.
Cordially, Todd

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Cut-Throat » Fri Aug 02, 2013 10:17 am

Simplegift wrote:For over a month now, the S&P 500 has been trading in a range at or above its March, 2000 peak, which it first surpassed back in June (inflation-adjusted, total returns, red line in chart). Perhaps it's time to put the narrative of the "lost decade" behind us?
Except that decade ended about 3 years ago.

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Ged » Fri Aug 02, 2013 10:36 am

It's still microscopic real return over 13 years.

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by SimpleGift » Fri Aug 02, 2013 11:26 am

Ged wrote:It's still microscopic real return over 13 years.
True. But my point in posting the two charts was that long-term equity investors should not be looking at just one decade's returns (or 13 years, as the case may be). Those who have only been investing since 2000, and may be feeling a bit of frustration or concern, should keep the long view in mind. Granted, 30-year real total returns have been as low as 2% historically. This is just the luck of the draw. But the long-term average has been about 6.5% over 30-year periods — including the latest "lost decade" period.
Last edited by SimpleGift on Fri Aug 02, 2013 11:49 am, edited 1 time in total.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Wagnerjb » Fri Aug 02, 2013 11:43 am

Simplegift wrote:Perhaps it's time to put the narrative of the "lost decade" behind us?
I agree. But people trying to sell active management and high-priced funds need articles like that to scare the naive into believing that a) market returns are lousy and b) they have the secret behind beating the market.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by bobcat2 » Fri Aug 02, 2013 1:49 pm

Perhaps it's time to put the narrative of the "lost decade" behind us?
Yes. I agree. Now we can give it the more accurate title - the "lost 13 years". :wink:

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by bobcat2 » Fri Aug 02, 2013 2:01 pm

But the long-term average has been about 6.5% over 30-year periods — including the latest "lost decade" period.
Global real stock returns have been about 5%, not 6.5%, since 1900, which is a very long period. Here are the real annual mean geometric equity returns from 1900-2012.

Code: Select all

                   Annual real return
US                        6.3%
World                     5.0%
World exUS                4.4%
Source: Credit Suisse Global Investment Returns Yearbook 2013

Link - http://www.investmenteurope.net/digital ... al_web.pdf

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by baw703916 » Fri Aug 02, 2013 2:15 pm

Simplegift wrote: Finally, for the record, today's 30-year trailing real total return, including the "lost decade," is over 7%, a bit more than the long-term average.
I would expect the 30-year trailing returns to drop over the next several years simply because the early-mid 1980s had such strong returns--unless the valuations double over the next 5-6 years.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by SimpleGift » Fri Aug 02, 2013 3:08 pm

bobcat2 wrote:Global real stock returns have been about 5%, not 6.5%, since 1900, which is a very long period.
Point well taken, bobcat. One can get so focused on the charm of the S&P Composite data that it's easy to forget about the long-term global numbers. To quote from the same 2013 Global Yearbook to which you linked:
Credit Suisse 2013 Global Yearbook wrote:US financial markets are also the best-documented in the world and, until recently, most of the long-run evidence cited on historical asset returns drew almost exclusively on the US experience. Since 1900, US equities and US bonds have given real returns of 6.3% and 2.0%, respectively.

There is an obvious danger of placing too much reliance on the excellent long-run past performance of US stocks. The New York Stock Exchange traces its origins back to 1792. At that time, the Dutch and UK stock markets were already nearly 200 and 100 years old, respectively. Thus, in just a little over 200 years, the USA has gone from zero to almost a one-half share of the world’s equity markets.

Extrapolating from such a successful market can lead to “success” bias. Investors can gain a misleading view of equity returns elsewhere, or of future equity returns for the USA itself. That is why this Yearbook focuses on global returns, rather than just those from the USA.
Cordially, Todd

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by bobcat2 » Sat Aug 03, 2013 8:39 am

Even in the US there can be long periods when real stock returns are significantly less than 6.5%. For example, over the most recent 50 year period (1963-2012) the real return on US stocks is 5.6%. Again the source is the Credit Suisse 2013 Global Yearbook.

The yearbook is an annual update of the "Triumph of the Optimists" stock, bond, and bill return data for most global capital markets going back to 1900.

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by nisiprius » Sat Aug 03, 2013 9:04 am

The "lost decade" has to be taken for exactly what it is. Personally, the phrase "lost decade" seems to me to be accurate in every respect. There's no "narrative" of a lost decade, there was a lost decade. During 2000-2009 my savings bonds were my highest-performing investment. I didn't expect that! I didn't think savings bonds were a "good" investment then and I don't think their a "good" investment now, so taking them as a measure I'd have to say stocks were not a good investment from 2000-2009.

The effect of the lost decade is large enough to have resulted in a full 1% drop in the casual numbers that retirement writers fling around as being "the historical return of the stock market." In 1999 when I really was given a retirement workbook in a 401(k) educational session, "the historical return of the stock market" was 11%. (11.39% starting from 1926 according to the moneychimp calculator). Now, it is 10%. (9.87%, to be precise). They always have weasel-wording and asterisks, but there's no question in my mind that we were encouraged to use 11% as a planning number then, and one lost decade later, people are now being encouraged to use 10%. It is as if we knew the mean of the underlying distribution, instead of inferring it from data which has far too high a variance to make an accurate inference. (And as if the stock market even were Gaussian, rather than fractal).

If you believe, as I do, that almost every retirement saver really ought to have a meaningful stock allocation, the rationale has to rest
  • BOTH on the long-term real return of the global stock market
  • AND on the reality of experiencing a lost decade now and then.
It's absurd, and it's cheerleading for stocks, to say that periods like 2000-2009 aren't bad or don't matter. You have to be able to explain to people why they might very well have a lost decade or more in their own investment lifetime. Why they might, yes they might, they really might hit a 2008-2009 or a 1987 or a 1929-1933 and the chance of its happening is more like "rolling snake-eyes" than "being hit by lightning." And nevertheless, they should have a decent slice of stocks anyway.

Inducing people to underestimate the risk of stocks and allocate to stocks beyond their risk tolerance, is just going to lead to bitterness, selling at the bottom, and subsequent overreaction when lost decades do happen.

If people can't be convinced to invest in stocks by a fair presentation of the risks, including 1929 (there's a sort of tacit understanding that the Great Depression shouldn't count because it was an outlier, and because it would be unpatriotic to suggest that anything that's actually happened before could potentially happen again), then they shouldn't invest in stocks. It ought to be possible to be convincing while still being accurate.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by SimpleGift » Sat Aug 03, 2013 9:29 am

nisiprius wrote:Inducing people to underestimate the risk of stocks and allocate to stocks beyond their risk tolerance, is just going to lead to bitterness, selling at the bottom, and subsequent overreaction when lost decades do happen.
Actually, nisi, the point of the original post is not to "induce people to underestimate the risk of stocks," but rather to look at 30-year periods rather than 10-year periods.

The global stock market has indeed averaged 5% real total returns over its history — but there have been many historical 30-year periods when its real total returns were only 2%-4% annualized (see chart in the original post). This should be much more sobering for the long-term investor than what happens in any particular decade. A decade of returns, "lost" or not, is irrelevant over the lifetime of the average investor.
nisiprius wrote:The "lost decade" has to be taken for exactly what it is. Personally, the phrase "lost decade" seems to me to be accurate in every respect. There's no "narrative" of a lost decade, there was a lost decade.
The last decade may have had 0% real total returns, but the 30-year period including the last decade returned over 7% annualized. A new narrative for your consideration.
Last edited by SimpleGift on Sat Aug 03, 2013 10:43 am, edited 1 time in total.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by jeffyscott » Sat Aug 03, 2013 10:31 am

Simplegift wrote:Much more relevant for long-term investors is this second chart, showing 30-year rolling returns for the S&P Composite since 1871 (again, real total returns, red line in chart). It's notable that the U.S. stock market has experienced 30-year real returns in the 2%-4% range for extended periods in its history — so even today's modest forward real return expectations (in the 4%-6% range) are not a given. Finally, for the record, today's 30-year trailing real total return, including the "lost decade," is over 7%, a bit more than the long-term average.
Since we have 13 years with real return of about 0%, in order for the 30 years beginning in 2000 to have even 2% real, the next 17 years would need to be a bit above 3.5% real.

OTOH, if the current 30 year is 7% real, a 50% drop on monday would still leave it at over 4.5% real.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Leesbro63 » Sat Aug 03, 2013 10:38 am

Yet people who were in the accumulation stage were able to buy stocks at (relative to today) very low prices. Rick Ferri, in 2008, suggested that it (2008) might be the last great buying opportunity for baby boomers to turbocharge their retirement accounts. As of today, he's looking very right. (I recognize that another "great buying opportunity" is always potentially around the corner).

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by nisiprius » Sat Aug 03, 2013 10:58 am

Simplegift wrote:The global stock market has indeed averaged 5% real total returns over its history — but there have been many historical 30-year periods when its real total returns were only 2%-4% annualized... A decade of returns, "lost" or not, is irrelevant over the lifetime of the average investor... The last decade may have had 0% real total returns, but the 30-year period including the last decade returned over 7% annualized. A new narrative for your consideration.
Ah, well, I am sure we are both convinced that narratives are poison. And that the only thing worse than narratives are slogans ("lost decade," "interest rates can only go up," "stocks always win over any 30-year period," etc. etc.)

I guess my only point is that "lost decade" is useful and honest in conveying the point that lost decades happen.

Your point about 30-year periods is well taken. It's a pity there isn't a catchy word for "period of thirty years." "Generation" comes close.

I do have a question, to which I remember seeing partial answers, but no definitive answer. What's the "half power beam width" of retirement savings? That's a reference to the way you measure the diameter of a blurry spot of light such as a laser beam. For real retirement savers, accumulating during working years and withdrawing during retirement, what is a realistic shape for the portfolio dollar value, and what is the real effective average dollar-weighted time in market? There is a crazy practice of doing everything in finance with using boxcar averages with all-or-nothing start and endpoints. It is almost impossible to overestimate the influence of accidents of endpoint choice in such averages.

I think the actual experience of individual investors is that the years of high portfolio value are relatively concentrated and that the "half power beam width" is something more like 15-20 years than 30 or 40, i.e. the variability of an individual investor's personal outcome is more like the variability of 15-20 year moving averages than like the variability of 30-40 year moving averages.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by allsop » Sat Aug 03, 2013 11:08 am

nisiprius wrote:
Simplegift wrote:The global stock market has indeed averaged 5% real total returns over its history — but there have been many historical 30-year periods when its real total returns were only 2%-4% annualized... A decade of returns, "lost" or not, is irrelevant over the lifetime of the average investor... The last decade may have had 0% real total returns, but the 30-year period including the last decade returned over 7% annualized. A new narrative for your consideration.
Ah, well, I am sure we are both convinced that narratives are poison. And that the only thing worse than narratives are slogans ("lost decade," "interest rates can only go up," "stocks always win over any 30-year period," etc. etc.)

I guess my only point is that "lost decade" is useful and honest in conveying the point that lost decades happen.

Your point about 30-year periods is well taken. It's a pity there isn't a catchy word for "period of thirty years." "Generation" comes close.

I do have a question, to which I remember seeing partial answers, but no definitive answer. What's the "half power beam width" of retirement savings? That's a reference to the way you measure the diameter of a blurry spot of light such as a laser beam. For real retirement savers, accumulating during working years and withdrawing during retirement, what is a realistic shape for the portfolio dollar value, and what is the real effective average dollar-weighted time in market? There is a crazy practice of doing everything in finance with using boxcar averages with all-or-nothing start and endpoints. It is almost impossible to overestimate the influence of accidents of endpoint choice in such averages.

I think the actual experience of individual investors is that the years of high portfolio value are relatively concentrated and that the "half power beam width" is something more like 15-20 years than 30 or 40, i.e. the variability of an individual investor's personal outcome is more like the variability of 15-20 year moving averages than like the variability of 30-40 year moving averages.
Nisi's point is very reasonable as there is significant risk in investing in equity. We have expected returns not guaranteed ones, but even on this forum there seems to be some confusion.

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Higman » Sat Aug 03, 2013 11:10 am

The lost decade was lost only if you were 100% stock. Rick Ferri analyzes the returns using some asset allocation models:

http://www.forbes.com/2010/01/05/stocks ... ferri.html

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by SimpleGift » Sat Aug 03, 2013 11:16 am

nisiprius wrote:For real retirement savers, accumulating during working years and withdrawing during retirement, what is a realistic shape for the portfolio dollar value, and what is the real effective average dollar-weighted time in market? There is a crazy practice of doing everything in finance with using boxcar averages with all-or-nothing start and endpoints. It is almost impossible to overestimate the influence of accidents of endpoint choice in such averages.
Good observation, nisi. Such an analysis would be an excellent addition to the way in which we discuss historical portfolio returns — and much more relevant for most investors. If this type of dollar-weighted analysis hasn't already been done, it would seem like a good and very useful project for someone like Wade Pfau.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by nedsaid » Sat Aug 03, 2013 11:19 am

Isn't the "Lost Decade" another way of saying that we experienced a secular bear market? There was another thread where the idea of a secular bear market was ridiculed and pilloried but I guess it is okay to call it a lost decade.

Yes it was real and yes all of us who were invested during that time experienced it. It really happened.

I didn't do so bad. Not due to brilliance of my part but to a diversified portfolio. A good helping of bonds really helped, as did Value stocks, International Stocks, and the good old Mid-Caps. Subdued returns but not a completely lost decade.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Call_Me_Op » Sat Aug 03, 2013 11:21 am

allsop wrote: Nisi's point is very reasonable as there is significant risk in investing in equity. We have expected returns not guaranteed ones, but even on this forum there seems to be some confusion.
Well, this forum is not monolithic. It consists of investors with many different experience and knowledge levels. So it should not be surprising that some of the newbies do not yet understand the basics. But relative to the public at large, in aggregate this is a very educated forum.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by baw703916 » Sat Aug 03, 2013 11:27 am

The 70s were pretty much a lost decade, too, and let's not even mention the 30's.

Nisi's observation that 30 years is about a generation may be onto something. In the modern financial era (since the Fed was founded about 100 years ago), U.S. financial markets do seem to have a periodicity of 30-35 years. There haven't been enough cycles to be overly confident in this observation, but it suggests that every 30 years a new generation of investors and financiers comes along, and not having the experiences (or being willing to listen to) the previous generation, repeats many of their mistakes, always with some novel wrinkles.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by allsop » Sat Aug 03, 2013 11:31 am

Call_Me_Op wrote:
allsop wrote: Nisi's point is very reasonable as there is significant risk in investing in equity. We have expected returns not guaranteed ones, but even on this forum there seems to be some confusion.
Well, this forum is not monolithic. It consists of investors with many different experience and knowledge levels. So it should not be surprising that some of the newbies do not yet understand the basics. But relative to the public at large, in aggregate this is a very educated forum.
[OT comment removed by admin LadyGeek]

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by daytona084 » Sat Aug 03, 2013 11:45 am

Higman wrote:The lost decade was lost only if you were 100% stock. Rick Ferri analyzes the returns using some asset allocation models:

http://www.forbes.com/2010/01/05/stocks ... ferri.html
Very true. Furthermore, the "lost decade" was lost only if you purchased all your stock allocation at the beginning of the decade, and sold all your stock allocation at the end of the decade. Not what a Boglehead would do. Presumably, most of us were buying throughout the decade, including lots of bargain priced stock index funds in 2002, 2003, 2008, and 2009. Not to mention re-balancing.

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Valuethinker » Sat Aug 03, 2013 11:48 am

baw703916 wrote:The 70s were pretty much a lost decade, too, and let's not even mention the 30's.

Nisi's observation that 30 years is about a generation may be onto something. In the modern financial era (since the Fed was founded about 100 years ago), U.S. financial markets do seem to have a periodicity of 30-35 years. There haven't been enough cycles to be overly confident in this observation, but it suggests that every 30 years a new generation of investors and financiers comes along, and not having the experiences (or being willing to listen to) the previous generation, repeats many of their mistakes, always with some novel wrinkles.
But, of course, now that we have Google, the internet and so much historic data at our finger tips we are much smarter than we were back then, when we were just our dumb ancestors.

So this 30 year cycle will no longer repeat ;-).

(I have observed in financial institutions the cycle of mistakes is about 20 years, because careers in management in financial institutions don't last much longer than that. When I began working in the early 90s in the industry, there were a *few* old timers who remembered the 70s bear market, but most people had begun their careers in the 1980s bull market.

There was *no one* who remembered the 1960s Bull Market, the tech bubble (I mean the 1964 one), National Student Marketing etc. When I read John Brooks 'The Go Go Years' it was an eye opener (also Adam Smith 'The Money Game').

The origin of 'this time it's different' seems, literally, to be that for each generation, this time is a first time.

Or as my mother (born in the 1920s) once observed, with a vague and mysterious smile 'every generation thinks it invented pre marital s-x' ;-).

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by nedsaid » Sat Aug 03, 2013 11:54 am

Rick Ferri's article also talked about REITs. I also had them in my portfolio during the "lost decade" and they were a help.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by staythecourse » Sat Aug 03, 2013 12:46 pm

I have certain pet peaves and one is surely using SP500 returns over ANY certain time point to make any argument good or bad.

It is so academic to say"SP500 produced x amount from y year to z year". The problem is it does not represent how a real, individual investor invests their money.

Here are some of the differences:
1. No one puts all their money into their investment in Y year.
2. No one takes all of their money out of their investment in Z year.
3. Very few if any put all their money in just large cap blend, i.e. SP 500. People diversify either using international equity or bonds.
4. No one goes the whole time without adding any new money.
5. Folks who use different asset classes would have gotten plenty of chances to rebalance which is not seen in the above.

Knowing all of the above points why does Anyone EVER use the line "SP500 produced x amount from y year to z year"?? When folks look at data presented they need to ask if it represents real life situation.

Good luck.
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by allsop » Sat Aug 03, 2013 12:53 pm

allsop wrote:
Call_Me_Op wrote:
allsop wrote: Nisi's point is very reasonable as there is significant risk in investing in equity. We have expected returns not guaranteed ones, but even on this forum there seems to be some confusion.
Well, this forum is not monolithic. It consists of investors with many different experience and knowledge levels. So it should not be surprising that some of the newbies do not yet understand the basics. But relative to the public at large, in aggregate this is a very educated forum.
[OT comment removed by admin LadyGeek]
Thank you for your even-handed moderation of my post.

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by bobcat2 » Sat Aug 03, 2013 2:36 pm

baw703916 wrote:The 70s were pretty much a lost decade, too, and let's not even mention the 30's.
Let's also not forget the decade 1910-19 where the annual real return of the US stock market was -2.6% per year. So over the last roughly 100 years there have been several extended stretches of bad returns.

The forty year period from 1910-1949 produced less than scintillating US real stock returns of 4.2% per year. US stock market investing is a high expected return/high risk business. :wink:

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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by baw703916 » Sat Aug 03, 2013 9:46 pm

bobcat2 wrote: US stock market investing is a high expected return/high risk business. :wink:
+1 :happy
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Default User BR » Sun Aug 04, 2013 12:22 pm

nedsaid wrote:Isn't the "Lost Decade" another way of saying that we experienced a secular bear market? There was another thread where the idea of a secular bear market was ridiculed and pilloried but I guess it is okay to call it a lost decade.
Only because some of us think "secular" markets are meaningless terms for the most part. Many of us take the view that it's not possible to tell what kind of secular market it is until well after the fact. There are even arguments that the previous "secular bull" continued and that 2000 and 2008 were sharp cyclical bears within it. Or not. The key is, what does it matter what you call it? I think the same about this or that decade.


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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by Valuethinker » Sun Aug 04, 2013 4:11 pm

bobcat2 wrote:
baw703916 wrote:The 70s were pretty much a lost decade, too, and let's not even mention the 30's.
Let's also not forget the decade 1910-19 where the annual real return of the US stock market was -2.6% per year. So over the last roughly 100 years there have been several extended stretches of bad returns.

The forty year period from 1910-1949 produced less than scintillating US real stock returns of 4.2% per year. US stock market investing is a high expected return/high risk business. :wink:

BobK
4.2% real return sounds to me to be pretty good, in fact. *very* good.

(as you well know, but others may be less cognizant of) there is huge survivor bias here. Whilst the US was producing that 4.2% real return, Budapest, St. Petersburg, Cairo (I presume), Berlin, Vienna, Belgrade were producing 100% losses. And the UK undoubtedly did worse than 4.2% real over that period (I must look up what it was)- -this more or less covers the period where Great Britain went from the world's biggest economic and political power (internationally at least) to a pauper nation, deeply in hoc to its American creditors and vastly overextended in its remaining Empire. France made an equivalent transition (but had much higher economic growth in the 50s and 60s).

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nedsaid
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by nedsaid » Sun Aug 04, 2013 4:30 pm

John Templeton created his investing reputation by investing in Japanese stocks after WWII. He got great returns and helped get the public interested in investing overseas.

Did the German and Japanese stock markets suffer 100% losses? Big German and Japanese companies survived the war and prospered. Instead of making the famous Zero fighter, Mitsibishi now makes cars that many of us have driven. I would be interested in an answer.

I read or heard somewhere that prewar investors in German and Japanese stock markets would have recovered their losses post WWII. I don't know if it is true and have no knowledge or research to back it up. I know someone on this forum will dig up the data and post an amazing graph. Certainly many of the large companies survived and prospered.
A fool and his money are good for business.

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nedsaid
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Re: The "Lost Decade" and Long-Term Real Stock Returns

Post by nedsaid » Sun Aug 04, 2013 8:21 pm

I did find that the Japanese stock market closed near the end of WWIi and didn't reopen until almost four years later. I wonder what happened to the shares. Did they become worthless or did they merely stop trading?

I found a table of stock market returns during various time periods. The World War II period is shown from 1939-1948. U.S. is up 24%, U.K. is up 34%, France down 41%, Germany down 88%, Japan down 96%, and the World down 19%.

The World War II recovery period from 1949-1959 showed U.S. up 426%, U.K. up 212%, France up 269%, Germany up 4,094%,
and Japan up 1,565%. The World was up 562%.

So the answer seems to be no, the shares did not become worthless.

The article referenced the table from Credit Suisse Global Investment Returns Sourcebook 2011.

The information was part of a Motley Fool article How Stocks Have Performed Through Calamity, War, and Histeria.
A fool and his money are good for business.

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