Stats › Long run returns › Lost decade
The lost decade, 2000 to 2009
Most of what you read about stocks assumes that if you hold long enough, you win. Ten years is usually offered as long enough. This page is about the ten years where that didn't work: put a dollar into the S&P 500 at the end of 1999, reinvest every dividend, come back at the end of 2009, and you had 91 cents. Before inflation.
There's a second half to the story that gets left out, and it's the reason I built the page. Take the exact same five hundred companies and hold them in equal amounts instead of by size, and the same decade returned +64.0%. Same companies. Same start date. Same crashes. The only thing that changed was how much of each one you held, and that was worth 73 percentage points.
So this isn't really a page about a bad decade. It's a page about index construction, and about what happens when you buy a size weighted index at the top of a valuation extreme. It also lays out what the decade actually contained, because three bear markets and two recessions in ten years is worth seeing written down. The return figures, the bear market depths and the starting valuation come from three separate sources with different windows, all linked at the bottom. If any of it seems too neat, that's a good instinct, go and check.
From the end of 1999 to the end of 2009 the cap weighted S&P 500 returned -0.9% a year, a cumulative -9%. A dollar became 91 cents across a full decade, with dividends reinvested. Over the identical period the equal weighted S&P 500, holding the same five hundred companies in equal proportions, returned +5.1% a year and +64.0% cumulatively. The lost decade was not a lost decade for US equities. It was a lost decade for the largest US equities.
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