Friday, September 9, 2011

Bespoke: Market Performance Since 9/11/01 - Along with Best Performing Stocks

A few interesting tables in this entry by Bespoke Investment blog.  First are the broad asset returns by asset class - notice the dollar has lost a third of its value so by definition the asset you need to invest in (If you are American) needs to appreciate by 50%ish just to break even.   To repeat, as American policy is to steal from savers by devaluing, one needs a 50% gain in assets simply to stand in place on a consistent currency basis.  With the S&P 500 returning a whopping 10% over that time, you feel a 'bit' short.  This is what many people don't understand when they see the market rally while the dollar is crushed - you can't look at one without the other.  (conversely if the market did little for a decade, but the currency rallied - savers would benefit.  Debtors not so much!)  This was discussed in length a few times on the website i.e. [Dec 23, 2010: Is the U.S. Dollar Weak or Not?]

For example if you price the market in gold (or silver) terms the returns look atrocious - here is a 3 year return (during one of the best rallies of all time in U.S. indexes) in the S&P 500, priced in gold.  Now to be fair gold has had a great run during some (not all) of this rally in the S&P 500 - especially lately.

More fair would be to price the S&P 500 in a relatively stable currency like the Canadian loonie or Australian dollar.  (I wont use the Swiss franc because someone can claim the same issue as with gold - it has had a great run of late)  So that mega rally in the S&P 500, priced in a stable currency does not look very good at all.


Anyhow here are the statistics from the major asset classes - just imagine all that CEO, board of directors, and upper level C suite compensation given to create nearly a 50% loss over a decade in the financial sector.  A lot of people looted the store....looking at you Mr. Rubin. 

Also I cut out the chart of the best performing stocks - if you had a few of these you could battle the Greenspan/Bernanke devaluation regime quite nicely. ;)

[click to enlarge]

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