Down week ends S&P index's worst decade

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Sunday, January 3, 2010

U.S. stocks fell last week, but the Standard & Poor's 500-stock index still finished the year with its biggest annual increase in six years. However, the major rally that began in March couldn't prevent the index from posting its worst decade ever.

Ford Motor fell 1.3 percent for the week, pushing its loss for the decade to 80 percent, even though it has rebounded strongly since the credit crisis threatened to push the carmaker into bankruptcy last year. Apple, which beat analysts' profit estimates for 19 consecutive quarters, climbed 0.8 percent, extending its advance for the decade to 720 percent.

This year's rally wasn't enough to restore money lost in two bear markets in the past decade -- one after the Internet bubble collapsed in 2000, and one when more than $1.7 trillion on global bank losses sent the index to a 38 percent decline in 2008. Including dividends, the S&P 500 has posted an average decrease of 0.8 percent a year since 1999, the first negative return for a decade since data began in 1927, according to S&P analyst Howard Silverblatt.

"This dispelled two myths: the notion that investment gains are easy, and the notion that stocks will win for the patient investor, no matter what we pay," said Robert Arnott, founder of Research Affiliates in Newport Beach, Calif.

The S&P 500 slipped 1 percent, to 1115.10, last week, paring its 2009 gain to 23.5 percent, the biggest advance since it climbed 26 percent in 2003. The Dow Jones industrial average fell 0.9 percent, to 10,428.05, finishing the year up 18.8 percent.

Investors who put $10,000 in stocks on Dec. 31, 1999, have about $9,200 now, while the same amount in 10-year Treasury notes would have grown to about $18,000 with a 6.1 percent annualized return.

-- Bloomberg News


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