Good Riddance to the '00s. History Suggests Things Will Be Better Over Next Ten Years

Though it ended badly for some (i.e., Lehman Brothers, Bear Stearns and the U.S. taxpayer), the first decade of the new millennium ushered in a new Gilded Age on Wall Street. The last 10 years saw the rise of hedge funds, $100 million bonuses and bundles of billionaires from as near as Park Avenue and as distant as Siberia.

Unfortunately, for the average American investor it was "deca horribilis," to paraphrase the Queen of England.

Overall, the last 10 years were the worst on record for U.S. stocks, dating all the way back to 1820s. Stocks on the New York Stock Exchange fell on average 0.5% annually. The S&P 500 was even worse, losing an average of 3.3% a year. And the Nasdaq, after eclipsing 5,000 in the first quarter of 2000, lost about half its value throughout the decade.

This secular bear market was especially cruel to many retail investors, who came to expect 10% annual returns after the raging bull markets of 1980s and 1990s when stocks rose on average 16.6% and 17.6%, respectively.

Yet, it wasn't a total loss. Commodity investors made a fortune. Gold rose more than 15% per year and oil prices, though extremely volatile, proved to be a brilliant bet.

And, let's not forget the emerging markets. Many of the best performing stock markets over the last 10 years hail from the former Soviet Union. Russian stocks are up more than 700% and the Ukraine has gained more than 900%. Hong Kong's Hang Seng Index, which has benefited from the rise of China, is up 545%.

History suggests another bull market for U.S. stocks is coming and the ‘10s will likely be better than ‘00s. There have never been two consecutive decades of negative returns in U.S. stocks.  Unfortunately, as Tom Petty once said, "the waiting is the hardest part."