Lost Decade for Stocks?

Headlines abound now about how horrible stocks performed on the just completed decade. The L.A. Times tells us that, "Stock market closes the books on a 'lost decade'." And, they show silly charts which mislead folks into believing that stock market investors lost money over the past 10 years. A chart like this one of a narrow index (the Dow tracks just 30 larger U.S. company stock prices) is hardly representative and includes no dividends. (The paper subsquently removed the chart)

In February, 2009, I wrote about the supposed lost decade talk which was making the rounds at that time and pointed out that stocks were comparatively cheap versus Treasury Bills and due for a major rebound. Since then, stocks have rebounded sharply and posted the best rebound from a bear market since the 1930s.

History has shown that bad decades are followed by good ones - see chart below.

Know the importance of being diversified and examining properly diversified stock and bond indexes.