Worst decade for stocks in 200 years

[philassor]

For all of those who did well this past decade, congratulations because we had severe headwinds... :-\

as documented by this article:

 

http://online.wsj.com/article/SB10001424052748704786204574607993448916718.html

[Uccmal]

Subject to timing bias.  Ten years ago we were at the absolute peak of the all time greatest rally.  If you had invested in 97 or 02/03 things would have looked much better, or March 09 for that matter.  The only thing these statistics tell us is that you would have had a lousy decade if you invested in a general ETF in January 2000.  If you had bought BRK you would be up more than 3 times. 

 

 

[Packer16]

I agree BRK did better but I think it is more on the order of an 80% gain ($55,000) to about ($100,000) versus a 200% gain.

 

Packer

[philassor]

Berkshire stock price went from 54,000 dollars to 99,000 dollars from January 1st 2000 to today that is an 83% appreciation over 10 years, that is a paltry 6.2% compounded annual return. Yet of course it is a great result compared to the dismall performance of the market which went to negative return during that stretch. This does not  even take inflation into account.

 

It does indicate that the headwinds were severe when mighty berkshire reverts to  only 6% over 10 years which I think everyone would agree is a "long term" increment. Over the preceding 20 years (from 1980 to 2000 Berkshire returned your investment by a factor of 124 yet in the last 10 years it did not even double.

 

I personally invested a substantial amount of money in Berkshire at fair value  and I must admit that the results are a little disappointing even considering the compression of valuation that the market is assigning to the stock these days. Cycles exist and we are experiencing a severe downdraft after the euphoria of the 90s.

 

I am the greatest fan of Buffett (never miss a meeting or an article) and I realize that the results are hindered by the size of the giant and I also realize that the results will revert more favorably in the next 10 year increment, but the facts are that the past decade was extremely rough.

[Uccmal]

BRK was a poor example.  My point was more of where you measure your decade from rather than Brks own performance.  If you start at a different point a couple of years removed, using the S&P,  you get very different results for your decade. 

[philassor]

the article does address your valid your point:

 

"To some degree these statistics are a quirk of the calendar, based on when the 10-year period starts and finishes.  The 10-year periods ending in 1937 and 1938 were worse than the most recent calendar decade because they capture the full effect of stocks hitting their peak in 1929 and the October crash of that year."

 

Nevertheless no matter how you slice it, the recent past of rolling decades has been subpar:

 

 

12/31/98-12/31/2008 : S&P 500 down 29%

 

12/31/97-12/31/2007:  S&P 500 down  up 55% (positive but not great for 10 years)

 

12/31/96-12/31/2006: S&P 500 up 88% (still subpar with a 6.5% compounded annual return)

 

12/31/95-12/31/2005: S&P 500 up 102% (mediocre 7.1% return)

 

Yes, the title of the article is a bit dramatic and slightly deceiving but the reality of the pulling

tide is evident.

So with Berkshire for example we are not swimming naked, but we are wearing no Speedo trunks either (could not resist).