Dead-end decade for shares likened to 1930s!
NEW YORK - December 13, 2009 - Investors have lost heavily on stocks but gained on bonds this decade for the first time since the 1930s.
Since January 2000, the S&P 500 has fallen about 25% in nominal terms. With dividends reinvested, the benchmark is still down 11%.
By contrast, a Barclays Capital index of Treasury bonds has delivered a total return, including capital gains and interest, of 85% this decade.
An index monitoring 30-year Treasuries, which are sensitive to inflation expectations, has generated a total return of 116% over the past ten years, according to Barclays Capital.
The pattern is similar in Europe, where investment in the equivalent indices for UK gilts and European government bonds would have generated total returns of 72% and 71%, respectively, while the FTSE Eurofirst 300 equity index is trading 37% below its January 2000 level.
Gerald Lucas, senior investment adviser at Deutsche Bank, said, “It has been a lost decade for equities, similar to the 1930s. Equities started at the top in 2000 and were overvalued relative to Treasury bonds.”
Since January 2000, the S&P 500 has fallen about 25% in nominal terms. With dividends reinvested, the benchmark is still down 11%.
By contrast, a Barclays Capital index of Treasury bonds has delivered a total return, including capital gains and interest, of 85% this decade.
An index monitoring 30-year Treasuries, which are sensitive to inflation expectations, has generated a total return of 116% over the past ten years, according to Barclays Capital.
The pattern is similar in Europe, where investment in the equivalent indices for UK gilts and European government bonds would have generated total returns of 72% and 71%, respectively, while the FTSE Eurofirst 300 equity index is trading 37% below its January 2000 level.
Gerald Lucas, senior investment adviser at Deutsche Bank, said, “It has been a lost decade for equities, similar to the 1930s. Equities started at the top in 2000 and were overvalued relative to Treasury bonds.”
