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Is the Predicted “Lost Decade” in Stocks Now Upon Us?

Posted By Isaac Nuriani |

Investors are wondering if the beginning of what some have called a possible “lost decade” in stocks actually has arrived. And if it has, they want to know if there anything they can do about it. Well, to start, as far as this year goes, it IS fair to say, barring some near-miraculous change in the next two weeks, 2018 will go down as a stock market bust.

Performance of S&P 500, Year-to-Date

(Chart Courtesy of StockCharts.com)

But could we really be at the beginning of a lost decade?

The predictions of a lost decade in stocks began mounting earlier this year. For example, Dan Kemp, Morningstar’s chief investment officer for Europe, the Middle East and Africa, went on the record in July to relate his company’s “expectation…that you won’t have any real return from U.S. equities over the next 10 years.”

Kemp is not alone in his belief that stocks effectively will have nothing to show for the next 10 years. Barry Bannister, in charge of institutional equity strategy at investment banking giant Stifel, says the same thing. Bannister is one of the few to accurately predict the February volatility that kicked off the unsettled journey equities have traveled in 2018. He said earlier this year in a note to clients that stock investors might as well write off the next 10 or so years based on three metrics in particular that suggest to him there will be a slowdown: (1) rolling price-to-earnings levels over the last 10 years, (2) market values compared to asset values, and (3) the levels of stock ownership by households.

“Those three methods imply an abysmal outlook for the S&P 500 return from 2018-2027E and a bear market that probably starts within the next year,” Bannister said.

Bleak Stock Market Picture: Not So Unusual

Even those who don’t necessarily see a lost decade for equities in America’s future are painting a pretty bleak picture of what lies ahead. In a recent survey of institutional investors – those who handle the most money for Wall Street’s biggest clients – the majority said they believe a big change is coming in market outlook and another financial crisis could be upon us in as soon as a year from now.

Things feel different now. Not only is the market clearly unable to sustain any gains, but it also has shown no reluctance to suddenly drop like a stone in a given trading day.

So, is a “lost decade” in stocks really in the cards for investors right now? One thing to consider is that, as ominous as it sounds, entire decades of little return from the markets are not as rare or unique as it might seem. The first decade of the current millennium could justifiably be seen as a lost decade for stocks. In the chart below, take a look at how the S&P 500 performed from 2001 to 2011.

Gold vs. S&P 500, 2001 to 2011

(Chart Courtesy of StockCharts.com)

Did you notice that the chart, besides illustrating the lowly performance of stocks during this time frame, also clearly shows how well gold performed while stocks were languishing?

This shouldn’t come as a terrible shock. The truth is, many of the factors that keep stocks subdued for lengthy periods, such as economic strife and geopolitical uncertainty, are the same factors that typically drive up the prices of precious metals.

Gold and Silver Soared During the Great Inflation

On that same note, the chart below shows how silver and gold fared in the 1970s, a decade known as the “Great Inflation.” Stocks then returned roughly 2% against a backdrop of double-digit unemployment and inflation and significant conflict in the Middle East:

Silver vs. Gold vs. S&P 500, 1970 to 1980

(Chart Courtesy of StockCharts.com)

In that decade – clearly a lost decade for stocks – gold soared roughly 1,500% and silver skyrocketed 2,100%.

Are you ready for the possibility of the next lost decade in the stock market?

Every day, more analysts are raising the possibility that it will be very difficult for equities investors to make money in the years to come. However, the very economic conditions that could act to significantly suppress stock growth have been in the past the same influences that sent gold and silver much higher. In fact, it is for that very reason well-known investment banking houses such as Goldman Sachs are now saying gold is the place to be in 2019.

To learn more about how you can turn deteriorating market conditions to your advantage, call Augusta Precious Metals at 855-242-4121 and speak with one of our dedicated gold and silver specialists. Whether you have an IRA, 401(k) or any other type of investment or savings account, there’s no reason to unnecessarily suffer through years of stomach-churning volatility and subpar returns. Let Augusta show you how adding physical gold and silver to your asset base can help keep your account moving forward while stocks are suffering through a “lost decade.”

 

Augusta cannot guarantee, and makes no representation, that any metals purchased by a customer will appreciate at all or appreciate sufficiently to make a profit, and there is no certainty that any metals can be sold for a profit. The future value of the coins you purchase cannot be predicted. You could lose money. Don't invest in Augusta products with money you can't afford to lose. Prices may rise and fall over time or rapidly. Past performance of any coin does not guarantee future results. Premium coins are sold for more than the value of the precious metal they contain. Augusta's prices and buy-back prices are determined and controlled by Augusta. This investment is speculative and unregulated.