How Bad Has This Decade Been?

When we first discussed the concept of the stock market's lost decade in March, the Dow was well off its October highs but still not officially in bear market territory.  It wasn't until July that the bear market was confirmed with a 20% decline from its all-time high.  When October rolled around, we noted that not only was the decade "lost," but it was also on pace to be the worst one since the 1930s.

Now that the Dow has lost over 40% of its value and has been in a bear market for more than a year, many investors are getting worn down.  It's like Charlie Brown with Lucy and the football.  At first, Charlie is up for the challenge to see if she'll finally let him kick it, but eventually the thrill of the challenge wears off, and he gives up.  With the Dow falling by nearly 40% from its peak during two different bear markets this decade, it's hard to blame investors for not wanting to get up off the ground.  To that end, we calculated what percentage of the time the Dow has been in a bull market during this decade and compared it to prior decades.  Has the process of trying to make money in the market been more futile than average during this decade?

While the Dow is currently on pace for its worst decade since the 1930s, the amount of time it has been in bull mode is only slightly less than average.  Since 1900, the average amount of time in each decade that the Dow has been in a bull market has been 70.1%.  The two best decades for investors were the 1950s, where the Dow was in a bull market the entire decade, and the 1990s, where it was in a bull market for 98% of the decade.  During this decade, the Dow has only been in a bull market 64% of the time.  While this is below average, there have been five decades (1900s, 1910s, 1930s, 1940s, and 1970s) where bull markets were even less frequent.  While it's hard to believe, things could be worse.

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Comments

[bosun.j:]

Well, there ya go! See, everything is going to be just alright. Break out that bottle of Dom!

2008 Nov 11 03:06 PM

[Steven Hansen:]

i could argue we have been in a bear market most of this decade tying it with the 1950's as the worst decade.

2008 Nov 12 02:06 AM