Investors ponder reality of ‘lost decade’

The recent carnage on Wall Street has left those with money in the stock market facing a bleak picture: In the past 10 years, investors have essentially been treading water.

“It was a lost decade for investors,” said Jeffrey Elfont, president of Pinnacle Capital Management based in Walnut Creek, Calif.

The numbers tell the grim story. The benchmark S&P 500 index is now lower than it was 10 years ago, and has fallen 0.9 percent.

The long-held mantras are familiar. Buy and hold. Be a long-term investor. The stock market, over time, will go up 7 to 10 percent a year. Don’t panic.

But 10 years later, those familiar strategies would have left investors with very little to cheer about.

“Investors have really been suffering,” said Michael Yoshikami, chief investment strategist with Walnut Creek-based YCMNet Advisors.

To be sure, dividends help improve the picture. While the S&P 500 itself does not pay dividends, mutual funds that track it do. Factoring those in, the total return of the S&P 500 was 20 percent over the 10-year period, according to Bloomberg News, or a less-than-sparkling 2 percent a year.

During those 10 years, the economy has withstood the dot-com meltdown, terrorist attacks, the uncertainties unleashed by two wars in the Middle East, corporate scandals, the housing bubble, a credit crunch, bailouts for Detroit automakers and a job market that is feeble at best.

But the bubbles were the real problem keeping the stock market flat, in the view of analysts, whether they were of the Internet, real estate or credit variety.

“Wall Street and our elected officials took us through a cycle of asset bubbles that were not sustainable,” Elfont said.

The steady drumbeat of stock market debacles has chewed up confidence.

“People just don’t have the stomach for the stock market anymore,” said Michael O’Neill, principal executive with Lafayette, Calif.-based Sage Capital Management. “They were so damaged by 2008 and 2009 that they are saying they’ve had it. They can’t stand the pressure of owning stocks.”