Ten Years Lost

Last week The World Bank warned of a “lost decade” ahead for the growth of the global economy due in large part to the effects of war, pandemic aftershocks, and shifting demographics of the world’s population.

It got me reflecting on the “lost decade” of investing when the S&P 500 Index of domestic large cap stocks generated a cumulative loss of 10% for the ten-year period ending 2009.  

That was a dark period for many investors.

The good news is that for investors who diversified beyond the concentrated index of domestic large cap stocks, it was a decade that generated surprisingly respectable returns.  

For instance: Vanguard’s Intermediate-Term Corporate Bond Index Fund (VICSX) generated a cumulative return of 96%.

Vanguard’s Emerging Markets Index Fund (VEIEX) generated a return of 128%.

Vanguard’s Small Cap Value Index Fund (VISVX) generated a return of 111%.

What’s ahead for the global economy and market returns? If the above data doesn’t give you pause for (diversification) thought, maybe Vanguard’s Market Perspective summary will. In this recent report, Vanguard forecasts domestic large cap stocks to be its worst performing asset class in the decade ahead.   

Will Vanguard’s prediction come true?

Maybe it will and maybe it won’t.

Don’t be a victim of another “lost decade” of investing.

It is time to diversify.  

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If you have generated $1 million or more of investible assets and are in or close to retirement, create an investment and financial plan with me that maximizes your opportunities for building wealth.