The Lost Decade

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Quote

"You can prove any stock market claim by selecting the right time period." - Unknown

The Lost Decade

Today we are going to talk about "The Lost Decade." 

Onto today's piece.

With current market conditions, many are wondering if we won't see all time highs for another 10 years.

Is this an overreaction? Maybe. The majority of people saying this are either trying to scare you or have been calling a crash for the last 15 years.

That said, let's talk about:

• What was the lost decade

• Will it happen again

• What should you do

The Lost Decade

Yes, this would make a great title for the next sci-fi thriller, but most investors know it as a time from March 2000 to January 2013 when the market was "flat."

In September of 2000, the SPX clocked a new all time high of 1,517. While this value would briefly be reached in October of 2007, it wouldn't be till March of 2013 that the market would continue rallying past this previous high for good (at least we hope).

This period is often referred to as "The Lost Decade." As you can guess, it's simply the 13 years where the market scratched and clawed to get back above all time highs (more than a decade but who's counting).

From the image below you can see that over this period you would have averaged an annual return of 0.05% with dividends reinvested. In elementary terms, you basically had the same amount of money in your account in 2000 as you did in 2013 assuming dividends were reinvested (based on a single lump sum).

Is It Happening?

What is the possibility of the next 10 years being flat?

Who knows, a lot can happen over a decade. As you might remember, the economy was booming in 2020. Then all of a sudden we had a mystery virus come along that sent this half of the universe into lockdown.

You can't predict events like this.

Considering the run-up we have had over the last 10 years it does raise the question of if we are due up for a break. After all "The Great Inflation Bubble" would be a legit name. 

If we do plunge into a major recession I wouldn't be surprised if the market took a few years to come back. While I don't necessarily expect a "lost decade" here are some bear market numbers that could be possible.

What Should You Do?

Having your finances set up correctly is most important.

Stop buying YOLO calls on meme stocks, and start contributing to your emergency fund (though you should have this done before investing).

By taking care of your finances while pastures are green, you automatically protect yourself from when sh*t hits the fan.

For example,

One of the replies to this tweet was "If we have already done this, how do we maximize our ROI during times like these?"

My answer is short.

Stay consistent and double down on looking for opportunities. For some, maximizing ROI means doing nothing if you are correctly prepared.

Till next time, Cade

Best Memes Of The Week

Enjoy this post? I'd appreciate it if you share it with friend. Thanks, you're the best.

What I Liked This Week

Same Cards, Different Table - Newsletter by Jack Raines on how we are all sitting at one big casino table...the stock market.

Some Good News - It's not the end of the world yet. Let Ramp fill you in on the bright side of things.

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email send me a DM on twitter. See you soon!