Monday, November 4, 2019

Now We Know What Followed the Lost Decade for Stocks

A decade ago I wrote about the lost decade for stocks from 1999 to 2008 when the S&P 500 total return failed to keep up with inflation. Since the depression, this also happened in periods that ended in 1947 and 1983. At the time I wondered what happened in the decades after these lost decades.

Here were the answers:

1948 to 1957: 14.4% per year above inflation
1984 to 1993: 10.7% per year above inflation

At the time I wrote “As you can see, those first two decades were spectacular! There is no guarantee that the upcoming decade will match these impressive results, but it does give us some hope.”

The results are now in:

2009 to 2018: 11.4% per year above inflation

This is in line with previous results, but is more than I could have hoped 10 years ago. S&P 500 stocks have nearly tripled in real terms (above inflation). Those who give up on stocks after weak periods pay a high price.

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