Why Investing is so Hard #2

There have been a lot of assessments of investing, a lot of evaluations and conclusions.

Remember Jeremy Seigle's book? "Stocks for the Long Haul'" compiled a lot of data from the last 200 years (the last decade excepted.) Since 1871 the annual return corrected for inflation has been: stocks 6.5-7.0%, bonds 2.8%. Generally Seigle felt that any 10 year period would show growth in value of the stock market. This is the basis for "buy and hold", the notion that markets rise in a ten year period if you just wait and not panic. Stocks were better than bonds and eventually the inherent value would be recognized in any ten year period.

BUT!
In 1982 the Japanese stock market was around 8,000 yen. In 1990 it rose to almost 40,000. This month it is about 8000. If you had bought into the Japanese anywhere in the last 20 years, you would have been slaughtered by your losses. Similarly, if you had bought at the low of 8,000 in 1982, you would be slaughtered by your stagnation and inflation.

The U.S. Dow was 11,722 in 2000 and is 12,418 now, 12 years later. That's 5.6 % increased over 12 years. That's an annualized return of 0.47%.

These are really terrible returns. Are things different? Are we in some new entity, some new paradigm? In Holland, the price of tulip bulbs is still far below what it was back in 1637, failing to come even close to recovery, after well over 350 years.

Maybe it's the same old thing, just seen with a wider lens.