The "00's" - WORST Investing Decade EVER

Barring a massive rally between now and the end of the year, the "00's" will be the worst decade in the history of the stock market.  

As reported in the Wall Street Journal [1] today, since the end of 1999 stocks traded on the New York Stock Exchange have lost an average of 0.5% per year.

Let's put this in historical perspective.

The 1990's were the best calendar decade in history for stocks, with an average investment return of 17.6% per year.

Even in the 1930's - the era of the Great Depression and usually considered the gold standard (pardon the pun) for bad markets, investors did better - with stocks "only" losing 0.2% per year.

And, as the Journal goes on, the news is even worst when we take into account inflation.  Since 1999, on a inflation-adjusted basis, the S & P 500  has lost an average of 3.3% per year.  

How bad is this? Given that the 1930's was a period of deflation, stock actually gained, in real terms, 1.8%  per year during that decade. Even the 1970's - a period of both a bear market AND inflation, did better than this last decade, with stocks only losing 1.4% after inflation.

So before moving to the "what does this mean" and "what do we do now" discussion, let's take a moment of pause to reflect on just how tough an investing decade this has been

Very, very tough. Trillions lost. Retirement plans delayed. Heartache and heartbreak.  

Perhaps most gallingly, while most suffered, there were those that did very well while really having no business doing so.  Hedge fund managers.  Derivatives traders.  Bank executives.

I think we can all agree on a hope for the new decade  - that the financial rewards in the next 10 years go more to the creators of value and less to the speculators on value.

Here are three more:

1. May Venture Capital Rise Again. Venture capital firms, for the first time in their history, lost money over a decade-long period.

Given the amazing and world-changing advances in human productivity and connectivity over the last 10 years, may the venture capital industry, and correspondingly the world of emerging technology - re-find its return footing.

2. May, on December 31, 2019, The NASDAQ and Dow be trading at, respectively, above 10,000 and above 30,000.  Even getting to these levels will mean a return of less than 5% annually from 1999 to 2019.

This falls into the category of the equity markets being "due" for a big returns decade. A simple, but defensible premise.  

3. May The Nation's Entrepreneurs Lead The Way.  Never has there been more productive, focused, mature, and cause-driven entrepreneurs alive in the world than there are today.

Take a look at the below list of the top performing stocks of the past 10 year (1999-2008): 

Symbol               Company                                             10 Yr. Cum. Return
GMCR..............Green Mountain Coffee Roasters................7,895.4%
HANS...............Hansen Natural........................................6,504.1%
BYI...................Bally Technologies..................................6,394.2%
SWN................Southwestern Energy.................................5,108.4%
CLH..................Clean Harbors.........................................4,456.0%
DECK...............Deckers Outdoor......................................3,669.5%
AMED...............Amedisys................................................3,669.2%
TNH.................Terra Nitrogen..........................................3,611.5%
BOOM..............Dynamic Materials......................................3,519.4%
QSII.................Quality Systems.......................................3,497.2%

As Tim Hanson points out, these companies have three qualities in common - they were mostly ignored and obscure when they began their meteoric rise, and they were SMALL.

And you know what?  Come 2019 there will be TEN DIFFERENT obscure and small companies that will make this list.

Noone knows who these companies will be. But to attain alpha, you MUST find them.

One thing is for sure - a few investors WILL find them.

The more interesting question of course is - will you be one of them? 

I look forward to your attendance and feedback.

Jay Turo
CEO
Growthink, Inc.

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