Anyone else feeling depressed about global equities 10 year outlook?

[conwy]

Apologies in advance for the negative tone of this post. But I'm just feeling a bit discouraged.

From what certain experts are saying, it looks like we're in for 10 years of low growth.

Kinda makes me sad/annoyed.

If the economy would tank, then there would be a fire sale and I could afford to buy stocks at a discount and maybe have a chance of getting rich in my 50s.

If the economy would boom, then the stocks I've already invested in would grow and I would get rich even faster.

But no... just my luck... I happened to earn most of my highest income after the recession and now all I get is a lousy "lost decade" of 3-4.5% growth (which is pretty much nothing after you take away 3% inflation).

Anyone else in my position and feeling similarly frustrated?

I guess I should stay the course and keep investing, but it looks like I'll probably make more from my salary than from my investments, and I'll probably never be above lower-middle-class and never able to afford anything more than a shoebox unless I move out to woop-woop.

So much for the myth of getting rich by working hard, making sacrifices, saving and investing. None of that means zilch if you happened to be born and enter the economy in the wrong period and all your hard work, blood sweat and tears pays only a measly pathetic 1% p/a.

*sigh*

[unemployable]

No, I've heard this all my adult life, going back to when the S&P and Nasdaq were both around 600.

Most countries' markets are valued well below the US's, and many US stocks have P/Es of 15 or less and/or dividends exceeding 4%.

Why limit this to stocks, anyway? You really want to loan the government money for 10 years at 2½%? You really want to buy a house in California?

[Dream of Freedom]

(sigh) Experts do not have a good record of accurately predicting the future in the stock market. Still, if you think growth is too slow where you are invested why don't you change it? There is always a bull market somewhere whether it is a fast growing emerging market or a trend tied to a specific industry.

[Toska2]

Nah. I dont think it should be steady linear or exponential up. Thats lazy forecasting and investing.

[IlliniDave]

Depressed is too strong a word for my reaction. I'm a little over three decades into my investing career, during which I endured an actual "lost decade", not just the potential of one. An atmosphere rife with ongoing predictions of such outcomes (or worse) were the most certain and consistent facet of investing.

I don't have much to say in the way of encouragement to people whose goal is to reap large investment returns in the near term. What I tell my kids is to get into the game now. Learning to gut out a sour investing landscape is part of the skill set.

Rather than depressed I'm a little frustrated (and cautious). It's likely I'll wade into retirement with these same economic outlooks. My "answer" is simply to do it the hard way by working a little longer than I might have had to had the math been a little more favorable.

[Seppia]

I don't have much to say in the way of encouragement to people whose goal is to reap large investment returns in the near term. What I tell my kids is to get into the game now. Learning to gut out a sour investing landscape is part of the skill set.
Rather than depressed I'm a little frustrated (and cautious). It's likely I'll wade into retirement with these same economic outlooks. My "answer" is simply to do it the hard way by working a little longer than I might have had to had the math been a little more favorable.

As always I fully agree with IlliniDave.
Also worth mentioning that the 10-15 year prospects are better that the USA's for European equities, and much better for Emerging Equities, so there's that

[jacob]

I'll note that 10 years in investing is just ONE single business cycle. A full investment career would include 5-6 of those. To me a "lost decade" is a decade that follows an "exuberant decade" where the market paid out its returns several years in advance which requires prices to go sideways while the economy catches up with the financial markets. One lifetime sequence might be lost-exuberant-exuberant-lost-exuberant-dead while another might be exuberant-lost-very exuberant-lost-lost-exuberant-dead, and so on. Such two individuals would have wildly different opinions on the proper way to invest.

What "we" need to be careful about is extrapolation emotions or our autobiographical experience based on one or three cycles to conclude that investing either hopeless or on the flip-side that everything will work out easily as long as you follow the simple plan that has an excellent 30 year record over the past 30 years

ONE.SINGLE.BUSINESS.CYCLE...

Basically, the OP complaint is as if a gardener is complaining that experts propose that next year's harvest will never see as many tomatoes as we saw in this year's bumper crop ... (and remember: bumper crops come with their own set of problems) while others add that experts don't know anything about gardening to which I say that experts might not be correct in their predictions, but they're not entirely ignorant either.

Check this out https://www.multpl.com/inflation-adjusted-s-p-500 and then try as a thought experiment to imagine how you would have felt if you had lived through a given period in real time: pick a random starting year and then contemplate your emotions over the next 10-20-30-40-50 years as the curve develops... maybe cover the screen with a piece of paper and slide it forward. I find this extremely useful. This is why I like (and recommend) reading old and dated books and newspapers on investing while enjoying the benefit of hindsight. Market history is more useful in this regard than mathematical theories. Experts agree

Add: Another "funny" thing is that different investment strategies perform differently during different types of cycles. For example, currently indexers, momentum investors (bio/tech in particular), and uninformed traders who have been riding the tide over the past 10 years are all very happy/feel like geniuses whereas hedge fundies and value investors are all depressed and giving up in disgust. During a "lost decade" when the market enters a trading range and value matters more than price, this polarity will switch 180. Point being, the decade is not lost per se... rather it's lost to some but gained by others.

[Jason]

A few years back I went to consult with a Fidelity guy and he pushed me to sell my tech fund because it created imbalance in my entire portfolio. I felt it was like asking someone in 1880 to sell their railroad fund. I know I am not a genius investor, but I do feel I have some cognizance of the time period in which I live and how to the best of my limited abilities, monetize it.

[thedollar]

https://www.multpl.com/inflation-adjusted-s-p-500

I count almost 150 years on the chart, leaving a 2.27% annual real return historically for SP500? Is that because dividends are excluded?

[jacob]

Yes. If dividends are included, the total inflation adjusted [real] return over the 150 period is ~7%/yr. Ditto over the past 20 years is 3.7%/yr.

More total real return numbers:

1959-1969: 6.8%/yr
1969-1979: -2.6%/yr
1979-1989: 9.9%/yr
1989-1999: 15.4%/yr
1999-2009: -5.9%/yr
2009-2019: 14.4%/yr
2019-2029: -2.4%/yr?

Alternatively:
1959-1979: 2.0%
1979-1999: 12.7%
1999-2019: 3.7%/yr

[Tyler9000]

Anyone else in my position and feeling similarly frustrated?

I guess I should stay the course and keep investing, but it looks like I'll probably make more from my salary than from my investments, and I'll probably never be above lower-middle-class and never able to afford anything more than a shoebox unless I move out to woop-woop.

So much for the myth of getting rich by working hard, making sacrifices, saving and investing. None of that means zilch if you happened to be born and enter the economy in the wrong period and all your hard work, blood sweat and tears pays only a measly pathetic 1% p/a.

*sigh*

Yeah, I've been in your position.

I graduated college in 2000, the single worst year to start investing in the US stock market since 1970. In fact, I experienced a negative annualized real return for stocks over the next 13 years! And that's not accounting for all the financial mistakes I made along the way when I had no idea what I was doing with my investments and accumulated lots of capital losses from jerking things around with no plan. Talk about depressing.

And in the face of all that economic adversity I reached financial independence in year 14.

When it comes to ERE on short timeframes, investment returns are vastly overrated because your savings rate will be trouncing them by design. So stop fretting about unimportant things and start looking for opportunities to succeed!

That said, I do realize that some people simply have a tough time dealing with poor returns. If economic cycles really do cause you distress then you might try educating yourself on portfolio concepts that do well in all economic conditions. Outlooks for individual assets are irrelevant when your asset allocation as a whole is prepared for any outcome.

[Lemur]

The higher your savings rate, the less important market growth becomes.
The lower your savings rate, the more important market growth becomes.

As for me, I'm still plowing away in s&p 500 indexes but I did start investing 30% of my bi-weekly investments in bond indexes. I figure I will keep doing so until the Shiller PE comes down from Mt. Everest. At that point, I'll go back to 100% equity...

[Salathor]

If you think stocks are going to be lame for the next decade, you could buy a house and pay it off as fast as possible. That's what I'm doing. I'm not worried about stocks' long-term outlook, but I'm only investing in tax-advantaged accounts currently and using other money to pay down debt.

If everyone's wrong about stocks, at least I have some exposure and a paid-off house.
If everyone's right about stocks, then I minimized losses and have a paid-off house.

Saving is always better than not saving.

[Lemur]

If you think stocks are going to be lame for the next decade, you could buy a house and pay it off as fast as possible. That's what I'm doing. I'm not worried about stocks' long-term outlook, but I'm only investing in tax-advantaged accounts currently and using other money to pay down debt.

If everyone's wrong about stocks, at least I have some exposure and a paid-off house.
If everyone's right about stocks, then I minimized losses and have a paid-off house.

Saving is always better than not saving.

Salathor. I like this idea and contemplated this myself but I'm absolutely gun shy about buying house for multiple reasons...how would you value the purchasing of a home? How does one know whether they're getting screwed or not? For a stock, I can always sell and take a small loss. For a house though....geez the transaction costs are astronomical if one wants to back out.

[jacob]

@Lemur - The financial answer is given by the NAV equation. It's in the ERE book if you have it, otherwise, it's nothing special/found everywhere. A simplification of the NAV equation is to compare the price of the house to the price of the rent. If the rent is higher than 1% of the price of the house, it's cheaper to own.

[oldbeyond]

Mentally, I don't think it's wise to get to hung up on couldabeens. I remember reading some thread over at Bogleheads where some guy had planned out his salary and net worth 30 years out. Then -08 happened, but he was still comparing himself to the blueprint version of himself, a decade later. I don't think there's too much to gain from that. We could be Okies trying to survive the Great Depression, dispossessed Chinese/Russian gentry or what have you. A bit dramatic, but you get my point.

As jacob says, a lost decade is not lost to everybody, see goldbugs pining for the the lost decade for stocks for example, or all the bears/value investors wishing it was 2008 again.

[Jason]

I spend time on the Motley Fool boards and they have a thread "your worst investments." It's very interesting as it goes back years. It's very informative to read in hindsight. Not just not buying wrong stock, but selling right stock too early i.e. "I don't see Netflix getting any higher." Whatever you say, there are companies right now that if you buy and hold, will make you tremendous money. I don't know, maybe index the good decades and hunt and peck in the bad ones?

[steelerfan]

Hindsight is 20-20. Everybody has a sad tale if letting a big one get away. I remember having $3K burning a hole in my roth pocket a few years back and was looking at BABA when it was $19/sh...That would have worked out well. I opted for something else which turned out ok. Not everything works out though. Most of my holdings are pretty defensive but I will swing for the fences.

I started investing in earnest kind of late for me in 1999. In my mid 30s not 20s like most of you. The 2000s kind of sucked but I really piled in in 2008-2009 when things went in the toilet. There will be times you feel like things are going nowhere. Resist the urge to time things too much, but keep cash available for opportunities. We will hit a recession pretty soon. Despite that I am still investing. Increasing cash in the 401K right now though.

[unemployable]

As a native Pittsburgher, I'm much more worried about the Steelers over the next couple of years than about the economy/stock market.

[steelerfan]

You aren't kidding. I still think they will do better than the browns though despite their irrational exuberance....Still the browns. We don't want people that don't want to be here so addition by subtraction.