Mr. Floyd Norris of the New York Times gives us a good account of how US stocks have fared in a relative sense compared to emerging markets and commodities over the past decade or so...
According to Mr. Norris, (all bold highlight mine) ``THE American stock market has soared 64 percent since it hit bottom eight months ago.
``And that leaves it just where it was more than 11 years ago.
``The United States stock market was the world leader in the great bull market of the late 1990s, but more recently it has been a laggard, in large part because of the weakness of the dollar. As the accompanying charts show, a stock investor looking for a part of the world to invest in back in 1998 — and to hold onto until now — could not have done worse than to choose the United States.
``The charts show the movement of the Standard &Poor’s 500 and the S.& P. International 700 in the period since the American index first reached 1,100 on March 24, 1998. The International 700, which encompasses the non-American stocks in the S.& P. Global 1,200, rose much faster in the middle of this decade, then fell faster in the global recession. But since prices bottomed, it has leaped more than 80 percent.
``For the entire period, an investor was better off in emerging markets than in the developed world. The segments of the global index representing Latin America, Australia and emerging Asian countries have soared. The Canadian index also more than doubled, thanks largely to natural resources stocks.
``But prices, as measured in local currencies, are lower now than in 1998 for both the S.& P. Europe 350 and the S.& P./Topix 150, covering Japan. Measured in American dollars, as shown in the charts, those markets posted gains of 20 percent and 7 percent, respectively, because of currency movements.
``On a sector basis, the best place to be over that period, both in the United States and globally, was in energy stocks. Oil prices fell to just above $10 a barrel in late 1998, and few investors saw value in the area. More recently, oil company profits set records as crude soared well above $100 a barrel, and even after the global downturn the price is more than $70.
``Financial stocks have suffered more in the United States than in the rest of the world, but the credit crisis brought down many banks in other regions as well.
``The charts also show 15 well-known companies from around the globe whose share prices are at least 300 percent higher than they were in 1998, and 15 such companies whose prices are less than half what they were then."
Additional comments:
-the return of the S & P 500 to the 1,100 level established 11 years ago implies that the US stocks have been in a bear market. It resembles Japan's lost decade-the American Edition.
This means that investors have largely lost than profited from stock investment.
-losses in the US markets do not account for real or inflation adjusted returns. According to the inflation calculator of the Bls.gov the US dollar has lost 25% of its purchasing power since 1998.This implies that US stocks have yet to recoup the real inflation adjusted levels in spite of the S&P reclaiming the 1,100.
-commodities and emerging markets have been clear outstanding winners.
-the Dow Jones have essentially reflected on the inflation of the US dollar, which have lost 75% in relative terms against gold.
This essentially debunks objections that gold is a lousy investment because it has no income. Chart courtesy of Reuters
-the US dollar isn't the primary source of the 'stagnation' of US stocks but instead reflects on bubble policies imposed by the US government. The US dollar serves only as a market outlet or a manifestation of such imprudent policies.
-This also shows that bubble policies have temporary benefits and don't work or prolongs investor agony over the long run, yet government officials are addicted to them.
-In addition, this also implies that the current policy directives to devalue the US dollar aimed at propping up the banking system and to reduce real liabilities means a wealth transfer and further outperformance of commodities and emerging markets relative to the US.
According to Mr. Norris, (all bold highlight mine) ``THE American stock market has soared 64 percent since it hit bottom eight months ago.
``And that leaves it just where it was more than 11 years ago.
``The United States stock market was the world leader in the great bull market of the late 1990s, but more recently it has been a laggard, in large part because of the weakness of the dollar. As the accompanying charts show, a stock investor looking for a part of the world to invest in back in 1998 — and to hold onto until now — could not have done worse than to choose the United States.
``The charts show the movement of the Standard &Poor’s 500 and the S.& P. International 700 in the period since the American index first reached 1,100 on March 24, 1998. The International 700, which encompasses the non-American stocks in the S.& P. Global 1,200, rose much faster in the middle of this decade, then fell faster in the global recession. But since prices bottomed, it has leaped more than 80 percent.
``For the entire period, an investor was better off in emerging markets than in the developed world. The segments of the global index representing Latin America, Australia and emerging Asian countries have soared. The Canadian index also more than doubled, thanks largely to natural resources stocks.
``But prices, as measured in local currencies, are lower now than in 1998 for both the S.& P. Europe 350 and the S.& P./Topix 150, covering Japan. Measured in American dollars, as shown in the charts, those markets posted gains of 20 percent and 7 percent, respectively, because of currency movements.
``On a sector basis, the best place to be over that period, both in the United States and globally, was in energy stocks. Oil prices fell to just above $10 a barrel in late 1998, and few investors saw value in the area. More recently, oil company profits set records as crude soared well above $100 a barrel, and even after the global downturn the price is more than $70.
``Financial stocks have suffered more in the United States than in the rest of the world, but the credit crisis brought down many banks in other regions as well.
``The charts also show 15 well-known companies from around the globe whose share prices are at least 300 percent higher than they were in 1998, and 15 such companies whose prices are less than half what they were then."
Additional comments:
-the return of the S & P 500 to the 1,100 level established 11 years ago implies that the US stocks have been in a bear market. It resembles Japan's lost decade-the American Edition.
This means that investors have largely lost than profited from stock investment.
-losses in the US markets do not account for real or inflation adjusted returns. According to the inflation calculator of the Bls.gov the US dollar has lost 25% of its purchasing power since 1998.This implies that US stocks have yet to recoup the real inflation adjusted levels in spite of the S&P reclaiming the 1,100.
-commodities and emerging markets have been clear outstanding winners.
-the Dow Jones have essentially reflected on the inflation of the US dollar, which have lost 75% in relative terms against gold.
This essentially debunks objections that gold is a lousy investment because it has no income. Chart courtesy of Reuters
-the US dollar isn't the primary source of the 'stagnation' of US stocks but instead reflects on bubble policies imposed by the US government. The US dollar serves only as a market outlet or a manifestation of such imprudent policies.
-This also shows that bubble policies have temporary benefits and don't work or prolongs investor agony over the long run, yet government officials are addicted to them.
-In addition, this also implies that the current policy directives to devalue the US dollar aimed at propping up the banking system and to reduce real liabilities means a wealth transfer and further outperformance of commodities and emerging markets relative to the US.
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