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The Anguish of A Lost Decade
Or, Why Buy and Hold Investing Can Steal in More Ways Than One
I know I'm not alone in saying that the older I get the more precious time seems to become. If anything, this sentiment is as sure a sign of age as gray hair and wrinkles.
Lately I can't even stand the thought of being in line at the grocery or gas station -- I'll literally walk or drive away if the wait looks to be more than than a minute or two. To watch television I use a DVR religiously, and refuse to sit though anything with commercials (except live sports broadcasts).
But if the passage of time makes life increasingly too brief to waste, imagine the anguish of losing an entire decade. For people who make it into their late seventies, a decade amounts to one-sixth of their adult lives. And lest I lapse into melodrama, I say all the above to introduce a topic taken up this week (March 26) on page one of The Wall Street Journal under the headline,
Stocks Tarnished by 'Lost Decade'
The piece had a respectable sprinkling of facts, quotes from bullish and bearish experts, comparisons to the 1930s and 1970s, plus the obligatory chart or two. Yet the story revolved around the painful truth that "The stock market is trading right where it was nine years ago." It didn't spare stock investors from the still-more painful truth that the major stock indexes not only fell short of historical norms over the past nine years, but the S&P 500 even added insult by failing to match the returns of a virtually risk-free vehicle -- Treasury bonds. One of the accompanying charts showed that vs. eight other investment vehicles (Treasuries, REITS, commodities, etc.) the S&P 500's return since March 1999 came in dead last.
Of course, as I said on this page about a month ago, it's rubbish to claim that the stock indexes reflect in any way the actual gains of equity investors themselves. Which is to say, equity investors collectively nearly always underperform the major indexes. And that's a fact I did not glean from the Wall Street Journal, but instead from the March Elliott Wave Financial Forecast. And if you think that the article I quoted above made buy & hold investing look unappealing, here's what that issue of EWFF (published Feb. 28) said: "While buy-and-hold sentiment is as strong as ever, that stance has been bested by a completely risk-free return for eight years." It further drove home the point with this chart.
And though the Journal covered the same topic a month later, the Elliott Wave Financial Forecast routinely provides subscribers with facts and analysis that no conventional source will ever include. You can see what I mean by following the fast steps below.
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