What a year, what a decade for stocks!
U.S. stocks end down sharply; post big yearly gain – MarketWatch.
The first decade of the 21st century was a tumultuous one for the U.S. stock market. From the end of 1999 to the end of 2009 the major stock indexes had these results:
- DJIA: -9.3%
- S&P 500: -24.1%
- NASDAQ: -44.2%
Not a good decade for buy and hold investors. Remember the decade started out with the 1990’s bull market nearing its peak before the 2002 bear market. Using the total return figures for the S&P 500, the decade started out with 3 down years (2000 to 2002) resulting in a 40% loss then 5 straight positive return years (2003 thru 2007) with the index gaining 67%, putting the index within 1 point of where it closed on 12/31/1999. 2008 saw the S&P 500 give up 37%, putting the decade deep in the whole again.
Following the disastrous 2008, in 2009 the market “climbed a wall of worry” to show nice gains in spite of an economic recession and daily bad economic news. Here are how the indexes fared for all of 2009.
- DJIA: +18.8%
- S&P 500: +23.5%
- NASDAQ: +43.9%
I think these number show the importance of having some sort of system to avoid big losses during the big market dumps. The markets had two in the 2000 to 2009 time span and they have left long term investors in pretty bad shape. The other side of the coin is to make money in the double digit gain years and figure out how to hold on to them. I have been reading a lot of stuff in this area recently and plan to spend some more time writing about asset allocation and market timing in 2009.
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