U.S. Equities' Heartbreaking Performance is Nothing New

Abstract

US equities have delivered poor long-term returns with surprising regularity: in the 1910s, the 1930s, the 1970s, and the 2000s. Following bear markets of the 1930s and the 1970s, stock valuations languished for a considerable period before providing investors with long-term returns that outperformed inflation. Investors should consider that much of the increase in stock values from March-August 2009 may be driven more by a 1990s-style belief in the infallibility of equities as an investment class than by tangible improvements in global economic conditions. The risk remains that much of the gains in stocks in 2009 could be another "false start" that characterized recoveries from former "super-bear" markets.