Tom Stevenson on "Gloomy Decades" and Their "Silver Linings"

In his new Daily Telegraph column, Tom Stevenson dishes up some sobering stuff:

In both the US and the UK the real total return from equities was negative between the end of 1998 and the end of last year. Even if you re-invested your dividends, you can buy less today with any money you squirreled away 10 years ago than when you started.

The performance has been worse in only one 10-year period in the past 110 years. That was the decade leading up to the end of 1974. Over the past 10 years, equities have underperformed almost everything else you could have invested in.

Then, further down the piece, he gets to the hopeful part:

Delve deep into the numbers that underpin Barclays Equity Gilt study and you will see that over the last century and a bit there have been 16 10-year periods like the past decade in which investors who prudently re-invested their dividends have lost money after inflation. Each time, they made money in the next 10 years – I calculate by an average of almost 11pc a year even after factoring in rising prices.

Maybe, it really is different this time, but I reckon the odds look a lot better today than they did 10 years ago.

Agreed. And I've got my fingers crossed.