by Gary Alexander
April 19, 2022
Looking backward, the decades of the last 100 to 200 years in America have pretty clear labels, or at least personalities. We speak of the Roaring 20s, the Depressing 30s, the War Years and Atomic Age in the 1940s, the suburban conformity of the 1950s, the revolution of the 1960s, the inflationary 1970s, the Reagan recovery in the 1980s, the tech boom in the 1990s – but what are the 20-oughts? Or the 20-10’s?
Stumped you, didn’t I? This idea came to me after reading a pair of articles in Foreign Affairs two years ago about the 2010s. One was titled “The Comeback Nation,” and the other was about “China’s Coming Upheaval” (both in Foreign Affairs, May/June 2020). Back in 2010, it was assumed, with good evidence, that America was in decline, and the current century would belong to China, but by 2020 – and certainly more so now – it appears that Uncle Sam is clearly #1 again, the Comeback Kid, beating all challengers.
When it comes to stock market performance, the decades also have clear personalities. The 1930s, 1970s, and 2000s were clearly terrible decades – delivering net declines, in nominal and real terms, in the broad market averages to investors. However, each was followed by 18 to 20 good years – 1945 to 1965, then 1982 to 2000, and now – which seems to imply that we could continue growing into a new Roaring 20s.
As I’ve written about several times in the last two years, the 1920s didn’t start with a “roar.” The years 1920 and 1921 were dismal, as was the decade before it. We “earned” the Roaring 20s after suffering through a terrible World War, the worst pandemic in our history, two absentee Presidents, a Red Scare, a stock market crash, post-war inflation then deflationary depression, Prohibition, and a fixed World Series!
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
In the last century, there have been four major up markets and three long bear markets, with the ups being much stronger than the downs, even though the down markets have tried our patience. Here’s a summary.
The bull markets have averaged 825% gains in 15+ years, and the bear markets have averaged 47% declines in 13 years, a clear advantage for the bulls over time, but you have to take inflation into account. For instance, the 22% decline from 1966 to 1982 is more like -75% adjusted for inflation, as was the NASDAQ decline from 2000 to 2009:
A Tale of Two Decades – Down 50% to 75% in Real Terms (2000-09) Then +400% to +600%
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
There were negative real returns in the 1930s, 1970s, and 2000s, but the 2000s were the WORST decade in the last century (in real terms) since inflation eroded returns more than in the deflationary 1930s. (We have heard a lot about Depressions and Stagflation, but be proud: We endured the worst real decade).
In those nine years, we suffered a post-Y2K recession, 9/11, two new wars, and the 2008 financial crisis.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Naming the 2+ Decades of the 21st Century
In 2010, pundits were saying that China would overtake America by 2025 – one major bank predicted it would happen by 2020 – but then China started believing all that hype, overextending its debt bubble and installing a “President for Life” (as did Russia). The Chinese stock market stumbled in 2015 and ended the decade just slightly up, while the U.S. market soared. Europe entered a second recession in 2011-12 with multiple funding crises in the PIGS nations (Portugal, Italy, Greece, and Spain), but America didn’t. For the first time in our recorded economic history, the U.S. went a full decade without a single recession.
The U.S. share of global GDP increased from 23% in 2010 to 25% in 2020. We rallied under Obama and Trump while being counted out. This is like the 1970s, when Japan was going to eat our lunch, but we revived and then soared on new technology. As Warren Buffett says, “Never count America out.”
Ruchir Sharma, Chief Global Strategist at Morgan Stanley Investment Management, and author of “The Ten Rules of Successful Nations,” wrote about America’s Great Comeback since 2009 in Foreign Affairs:
“The United States’ share of global economic power has essentially held steady for four decades. Over this period, the European Union saw its share fall from 35 percent to 21 percent. Japan’s share slipped from 10 percent to six percent, and Russia’s dropped from three percent to two percent. Meanwhile, China’s share swelled during that time from two percent to 16. So it is true that as China has risen, other major powers have declined. But the United States is not one of them.” (from “The Comeback Nation: U.S. Economic Supremacy Has Repeatedly Proved Declinists Wrong,” Foreign Affairs, May/June 2000)
Putting his numbers in chart form:
One major reason for Europe’s sharp retreat is their high rate of taxation, discouraging innovation, business startups, and entrepreneurship. Top personal income tax rates are 45% or more in most nations:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Meanwhile, the U.S. lowered tax rates on business in 2017 and became more competitive. As the decade closed, America was dominant. Then came COVID. We took a blow, but it was American pharmaceutical companies that rushed out effective vaccines in under 10 months – not European or Chinese medical research firms. China invented the virus and the lockdowns. America invented the vaccine solutions.
During the 2010-2020 decade, the U.S stock market grew far faster than any other stock market in the world, nearly four times the average of all other global markets. By the end of 2019, the U.S. market accounted for 56% of global stock market capitalization, up from 42% in 2010. The U.S. dollar also finished the 2010s on top of the world, according to Sharma, accounting for 75% of all overseas loans.
Most recently, we have seen a doubling of major market indexes from March 2020 to March 2022, so the third decade is off to a “Roaring” start. It’s time to name these 21st Century triplets, based on all this data:
The 2000s were “The Dismal Noughts” (or the “Ought Noughts”?)
The 2010s were “America’s Comeback Decade” (or “The Comeback Teens”)
And 2020-22 Looks Like the Start of “The New Roaring 20s”
Got any better ideas?
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
What Will it Take to Kill Inflation
Income Mail by Bryan Perry
U.S. Consumerism Is Bucking Inflation
Growth Mail by Gary Alexander
Naming the Decades of the 21st Century?
Global Mail by Ivan Martchev
The Momentum Move in Treasuries Continues: Where Will it End?
Sector Spotlight by Jason Bodner
Inflation Rates Will Normalize
View Full Archive
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About The Author
Gary Alexander
SENIOR EDITOR
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
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