Since End of 1999, U.S. Stocks’ Performance Has Been the All-Time Clunker; Even 1930s Beat It

From Wall Street Journal

The perpetual lie from smooth talking mutual fund and brokerage ads has been exposed. You will not likely earn 17%, 13% or even 7% annually from the stock market.

The Wall Street Journal reports that from 2000 to 2009, the return from the stock market has been negative not positive.

“The U.S. stock market is wrapping up what is likely to be its worst decade ever.”

“In nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s.”

“Investors would have been better off investing in pretty much anything else, from bonds to gold or even just stuffing money under a mattress. Since the end of 1999, stocks traded on the New York Stock Exchange have lost an average of 0.5% a year thanks to the twin bear markets this decade.” Wall Street Journal

How do people make money on the stock market? Most people don’t make money. Average investors are the marks, the cannon fodder for sharp traders who try to short stocks and make money when you lose.

The reality is for every person who makes something on a stock deal, someone has to lose. Often that someone is many people. It’s the rule of the “greater fool”. If you overpay for a share in one company, there is a greater fool coming who will buy it from you at an even higher price.

This is not to say that some people don’t make money. There are people lucky, nervous or smart enough to buy at the bottom and sell at the top. Of course, the trick is to know the top and bottom which even the wisest traders cannot predict.

On average, the stock market lost your money in the last decade with two major market purges – 2000-2001 and 2008-2009. The returns are so bad they make savings accounts and term deposits look great. It is the desire for unrealistic gains that causes us to take bigger risks and lose our money.