Decade of No Returns

In today’s edition of Markets and Money, we turn our attention to the
“Decade of No Returns” – aka, the “Lost Decade.” Students of recent
financial history may recall that our friends over in Japan have
already logged a couple of “lost” decades. Japanese workers still punch
time clocks every day, but the national economy barely seems to notice.
Meanwhile, the Nikkei Index has surrendered 73% of its value during the
last twenty years.

Here in the States, things are a little bit better. We’ve only lost ONE
decade so far…

The S&P 500 Index posted a total return of MINUS 9% during the first
ten years of the new millennium. And THAT was the “strong” index. The
NASDAQ Composite tumbled 40% during the same 10-year span.

Stocks are not exactly synonymous with economic vitality, of course.
And we know that US GDP increased during the decade. So maybe the US
economy isn’t as lost as the stock market suggests. But based on the
nearby chart, the economy looks so disoriented that no GPS device on
the planet could lead it back to the path of productivity. In terms of
job creation, the last 10 years were a complete bust.

US Lost Decade

Despite an abysmal 10-years of zero wealth creation and zero job
growth, betting on a second consecutive Lost Decade seems like a bad
wager. And yet, it happened in Japan…

But let’s not dwell on the negatives so early in this promising New
Year. Instead, let’s consider the potential positives – the upside of
the downside. According to Patrick Cox, editor of The Breakthrough
Technology Alert
, adversity truly is the mother of invention:

“Historically, downturns have been enormously creative times
technologically. Our current economic mess will be no exception.
Economic pressures are forcing reassessments and hard, creative
choices. The result will be an explosion of breakthrough

“In the early 1400s, German goldsmith Johannes Gutenberg invented the
movable-type printing press. This invention did far more than
facilitate book production and increase the availability of knowledge.
It started an information technology (IT) revolution that continues to
accelerate even today.

“In Gutenberg’s era, his advances in lithography not only increased
access to the world’s greatest thinkers, they also put practical
business and technical knowledge in the hands of commoners. This
seemingly insignificant invention smashed monopolies of thought and
political power. The result was exponential growth in science,
technology and democratic ideals. The Renaissance and the Enlightenment
followed, on up to our present era.

“We’ve already seen a series of printed circuit lithography
technologies revolutionize the electronics industry. Every electronic
device you own – from your television to your mobile phone – contains a
lithographically printed circuit board of one form or another. Like
many of the transformational technologies of the last century, it was
invented during the Great Depression. The timing was not a fluke.”

Eric Fry

for Markets and Money

Eric J. Fry
Eric J. Fry has been a specialist in international equities since the early 1980s. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short- selling. Mr. Fry launched the sometimes-abrasive, mostly entertaining and always insightful Rude Awakening.
Eric J. Fry

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Neal Vanderstelt

So true.. If only there would be a break-through in alternative fuel…
You know a replacement to oil and coal..

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