2000s a pox as flocks mock stocks
December 29, 2009Jon Brooks Comments Off“If you had $10,000 and put it in the S&P 500 at the start of the decade you would have performed worse than a person who merely stuffed the money into a mattress.”
Chalk up another one for the abysmal 2000s. This decade proved to be the worst for U.S. stocks. Ever. From last week’s Wall Street Journal:
The rest of the article is filled with alarming statistics. Let’s go to the blogs, shall we?
From The Big Picture:
But despite what many fools and asshats were claiming in the 1990s, stocks can only gain so much relative to earnings. Sure, other factors like population growth, economic expansion, productivity gains, all matter on the margins, but the bottom line is Earnings. But over the long haul, there is only so far you can run ahead of historical median rates of return.
The current horrific decade lost half a percent each year on average versus average annual returns of about 10-12% over the past century. Why? This under-performance is payback for the massive gains in the salad days of the late 1990s. As the table at right shows, the gains were far above median.
There is only so far you can deviate from the historical mathematical norm before mean reversion rears its ugly head…
Repeat after me: There is no free lunch. A decade of out-performance will be paid back one way or another.
From Mr. Swing:
It is fitting that we end the current decade just like we started it, with the bursting of bubbles. In the early part of the decade we were dealing with the fallout of the technology bust. That was quickly replaced by the even bigger housing bubble and that has now popped as well. The trillions lost by average Americans is incredible but in reality nothing was technically lost because the entire decade was one enormous Ponzi scheme and like all Ponzi schemes the wealth created is false. Bernard Madoff was simply the mascot of a decade built on phony money spewed out by the corporatocracy of Wall Street. What is even more troubling is how the actions taken by Wall Street are not being prosecuted in the same fashion as our justice system took on Bernard Madoff. The reason for that is the corporatocracy has legalized national bank robbery.
If you had $10,000 and put it in the S&P 500 at the start of the decade you would have performed worse than a person who merely stuffed the money into a mattress. The person who put their money into the NASDAQ at the start of decade is even in worse shape. We have experienced a lost decade. With employment, we now have the same number of people working as we did back in 2000. Only difference is in 2000 we had 280 million people and today we have 308 million people living in our country…
The NASDAQ is down 45 percent from the start of the decade. The only other time in history a lost decade has occurred in stocks was during the Great Depression. Of course, many try to hide this stubborn fact but this is part of the new reality. Much of the wealth created in the past decade was built on a weak foundation of sand. A form of corporate chicanery that gave too much power to Wall Street. And the power is still there since no real reform has actually taken place since the meltdown started in 2007.
Yet if we looked more closely we would have noticed the bust more quickly. We never recovered from the tech bust in terms of employment. Our current unemployment rate of 10 percent does not include the underemployed. With those working part-time jobs and discouraged workers included the rate goes up to over 17 percent…(T)he average American didn’t really enjoy the fruits of the turbo capitalism of the decade. Much of the gains have been wiped out but if we look at how the corporatocracy is doing they seem to be doing fine. Our current unemployment rate of 10 percent does not include the underemployed. With those working part-time jobs and discouraged workers included the rate goes up to over 17 percent…Much of the gains have been wiped out but if we look at how the corporatocracy is doing they seem to be doing fine…
While the S&P 500 is up a stunning 63 percent from its March lows, some of the banking
sector stocks are up 325 percent like Bank of America. JP Morgan is up 117 percent. Goldman Sachs is up 93 percent. The list goes on. The bailouts seem to be helping a few at the expense of the many.The same pattern holds for the healthcare sector with the recent bills being proposed. Their stocks are soaring. Want to take a guess as to why? The corporatocracy is running the show in D.C. and the lost decade is a product of their bubble blowing excess. The problem with the current system is Wall Street is run by a bunch of gamblers looking to make a quick buck. Now this wouldn’t be such a problem if the U.S. taxpayer wasn’t funding their shenanigans. But now, Wall Street has the explicit backing of the U.S. government. That is why the U.S. dollar is getting pummeled into the abyss. And that is another thing that we have lost during this decade.
So here we are a decade later with stocks below their 2000 point, unemployment in the double-digits, the U.S. dollar down by one-third, and housing values are quickly approaching their own lost decade point. What did we really financially gain in this decade? All this supposed financial innovation and this is what we get? I would say that the so-called innovation was an absolute failure. It was one gigantic Ponzi scheme. A con to convince average Americans that allowing Wall Street free reign would somehow result in them getting a piece of the gambler’s pie. In return, Wall Street took away any financial stability Americans once enjoyed and put the bill to them as well.
Americans also took part in this excursion. Not demanding restraint from their leaders or pushing for financial prudence. Many jumped into the mania and took out billions in home equity to gamble it up. This was nonsense. Yet this doesn’t come close to the trillions in ridiculous bets Wall Street placed. Derivatives on zany risk that had nothing to do with improving our economy. It was merely sophisticated gambling. And in the end, it wasn’t all that sophisticated since it blew up in their faces yet here we are bailing them out.
From Roseman Eruptions:
If the 1990s belonged to stocks and the 2000s belonged to bonds and commodities then, perhaps, the next decade will belong to chaos.
Portfolio insurance is now cheap. Considering the euphoria growing since March and the renewed state of complacency among market participants, perhaps the best speculations over the next decade are tied to crises-based investments that can appreciate amid global economic and political uncertainty.
Prospective trades for the next decade might include gold, the dollar, crude oil, the Chinese Yuan (if made convertible) the grains, managed futures funds, reverse-indexing and the VIX. Stocks and bonds will probably disappoint adjusted for inflation, which will make a fierce comeback over the next 36-60 months once banks start lending again.
From The Daily Reckoning:
Stocks have lost value over the last ten years. US stocks were about the worst thing you could own over that period. But what are the odds that they’ll be the worst thing you can own over the NEXT decade too?
Who knows… Historically, it would be unprecedented for stocks to have negative returns over a second 10-year term. That doesn’t mean it won’t happen. But is it a bet worthy of the Trade of the Decade?
Don’t know.
What we’re looking for are the extremes. We want to buy things that have been so beaten down for such a long time that they almost have to go up. And we want to sell things that have been going up for so long that people are sure they’re going up forever.
In 1999, gold was perfect for the buy side. It had been going down for 20 years…while other asset classes and money substitutes soared. On the sell side, stocks were perfect. The Dow had been going up since 1982…and prices had reached levels that could only be sustained by delusions and hallucinations.
But what now?
We have a couple more days to think about it… Stay tuned.
What else? “New Home Sales Drop 11.3% As Impact of Stimulus Fades,” says the WSJ.
Ah ha! Just as we’ve been saying. The ‘recovery’ is a fraud…it’s just hot money from the feds bubbling up the figures. Take away the hot money and the market goes cold.
In short, there is no ‘multiplier’…no magnifier…and no tooth fairy. Santa Claus? Well…we don’t know about that one. Santa brought us a nice cashmere scarf on Friday. He must be real. As for the rest of them, they are phonies…
From Gulag Blog:
After the 2004 election, you might recall, President Bush decided to spend his “mandate” pushing a scheme to privatize Social Security and encourage investment of retirement funds in the stock market. Many retirees — and many of those approaching retirement — lost a lot of their private nest egg in the market collapse that began last fall, but the damage would have been greatly compounded had they invested a good portion of their Social Security funds in the market as well.
From TigerHawk:
The worst decade ever for owning stocks. With good reason. But what are the odds there will be two such hideous decades in a row?
Good question.
