Compete with the big fish: insider secrets for upstarts and underdogs

DAVID WILSON
June 29, 2010 - 1:31PM



Even if you operate on the back of a broadband connection, you can still take on the big fish.
Statistics are a stark reminder of just how hard it is to keep a business afloat.

Forty-two per cent fail in the first four years, according to the Australian Bureau of Statistics. So, for a small business, competing with the big fish may seem like mission impossible.

But underdog status has its virtues. For one thing, fair go-fixated Aussies love underdogs. For another, in accordance with Hollywood scripts, upstarts do over-deliver - look no farther than the feats of New Zealand's world cup "All Whites" and Ghana's "Black Stars".

If you think that the two teams just got lucky, take a look at a selection of nitty-gritty tips on how to raise your game. Even if you run your business from a box room on the back of a broadband connection, with rigour and guile you could still make a splash, and become a "challenger brand".

So, read on, have a go. And never forget how lucky you are to be free from all those big company expenses: comfy office chairs, bonuses, pensions, plus - worst of all - salaries for staff who refuse to retire but effectively quit long ago.

How to punch above your weight: six secrets


1. Focus on focus

According to the director of new ventures incubator Pollenizer, Mick Liubinskas, to compete with big business you must tackle one area: the threat of dilution. In his view, the secret of building a business with heft is focus. A giant rival may beat you on scope, but, if you focus, it cannot match your ability to get things done.

Keep products simple. A lean and focused operation puts you in a position to thrive. According to Liubinskas, a plus of a focused approach is that you become easier to buy.

2. Come clean

Irrespective of any hopes you harbour about being bought out, resist the temptation to exaggerate your size. Be honest, says strategist Barry Maher, because Milly's Carpet Cleaning can be just as effective as a conglomerate claiming to be "agile, personal, friendly, service-oriented": classic small business traits. According to Maher, you can tackle whatever job comes up if you have a network of associates ready to act fast and flexibly address clients' needs.

Lower overheads help keep prices down.

3. Get a go-to guy

Forget about trying to generate mass publicity the way giants do.

Instead, Maher suggests, think local. Enlist the face of your firm to act as the neighbourhood go-to guy or gal for the press. Build local prominence on search engines and in social media.

4. Practise rapid reaction

However prominent you get, you must act fast. According to business coach Robert Gerrish, the ability to get on the case without bureaucratic obstruction is a key edge. Use it, Gerrish urges. Follow through. Do not let emails fester, as corporations do. "We can be responsive and we can be personal and jump on things that we feel are priorities," he says.

5. Express and experiment

Image now is about much more than clothes, Gerrish says, adding that your website must express your identity. Go for depth and integrity.

In the 'about us' section, where many businesses plonk stock shots of a spectrum of smiling models, describe your people and history. Be a "real" company instead of a big one, and innovate. Try new tools.

Gerrish highlights the presentational impact that an iPad can make.

6. Log off

Reduce your reliance on the internet. Instead of playing five or six rounds of email tennis, pick up the phone, Gerrish says. Suggest meeting for coffee, he adds, stressing the need to be touchy-feely, which banks have grasped. After focusing on online branding, banks are opening more strip shop branches, it seems. The reason: customers want old-school conversations - a good yak.


Source: theage.com.au

UMW clarifies oil&gas unit losses

2010/06/30

The UMW Group said it viewed the losses in its Oil & Gas Division as a temporary setback, as it has a number of greenfield projects which are expected to generate income and show positive results upon commencement of operations in the second half of this year.

As such, it considers a recent news article by a local paper quoting a source and referring to large losses or provisions for losses being required in its O&G unit, as not only inaccurate and baseless but misleading to investors.

In a statement, the group said the O&G Division suffered a loss of RM19.234 million in the first quarter, which was duly disclosed and reasons explained in an announcement on May 20, 2010.

The losses were attributed to 

• decreased drilling activities worldwide which resulted in a significant drop in demand for Oil Country Tubular Goods (OCTG), while 
• the countervailing and anti-dumping duties on seamless pipes made in China imposed by the United States, had affected the profitability of its associated company in the country.

UMW maintained that it has good corporate governance standards and transparent reporting methods.

However, the news article had implied that the group had incurred huge losses which had not been accounted for and which need provisions in the next few years.

"We view this as a baseless allegation as we were not able to provide our perspective or input on the matter," it added.

Meanwhile, the UMW Group is involved in four core businesses -

• Automotive, 
• Equipment, 
• Manufacturing and Engineering, and 
• Oil and Gas.

 -- Bernama

http://www.btimes.com.my/Current_News/BTIMES/articles/20100630120151/Article/index_html

SC slaps SJ Asset Management with restrictions

SC slaps SJ Asset with restrictions
Published: 2010/06/30

The Securities Commission (SC) has stopped SJ Asset Management Sdn Bhd (SJAM) from taking care of fresh funds after its examination of the fund manager raised concerns.

In a statement yesterday, the regulator said that with immediate effect, SJAM was prohibited from soliciting new mandates and to maintain and preserve all records in relation to clients' trades and payments.

"On-site examination as well as findings of BDO Consulting Sdn Bhd (BDO), which was appointed to assist in examining SJAM's books, accounts and records, have raised certain concerns," the SC said.

It did not say what the concerns were nor why it had asked BDO to do the job.

The SC has also instructed BDO to further examine, audit and report on SJAM's books, accounts and records, inclusive of assets held.

It said that over the last two years, it had intensified regulatory review and scrutiny over asset management companies.

SJAM, a licensed fund company incorporated in 1992 manages regional investments in Japan, Hong Kong, Singapore, Thailand, Indonesia, the Philippines, Taiwan and South Korea.

Its investment products include

• fund management, 
• managed portfolio, 
• investment services and 
• private equity accounts.

Whai Onn Tan is the managing director of SJAM, while Datuk Kamaruddin Hamzah, who sits on the board of directors of a few public-listed companies, is the director of the company.

Whai is also the head of fund and portfolio management.

Both Whai and Kamaruddin are also the owners of SJAM Holdings Sdn Bhd, the parent firm of SJAM.

Based on the company's website, SJAM has authorised capital of RM10 million and paid-up of RM6.38 million.

Its investment portfolio targets active, quality-growth companies with reasonable prices.


Read more: SC slaps SJ Asset with restrictions http://www.btimes.com.my/Current_News/BTIMES/articles/sjay-2/Article/index_html#ixzz0sK5GySrV

Investors flee stocks in global sell-off

Investors fled the US and European stockmarkets in a sell-off triggered by a wave of increasing alarm over the global economic outlook.

The Dow Jones Industrial Average fell 268.22 points, or 2.7 per cent, to finish at 9870.30. The Standard & Poor's 500 Index dropped 33.33 points, or 3.1 per cent, to close at 1041.24. The Nasdaq Composite Index slid 85.47 points, or 3.85 per cent, to end at 2135.18.

All but one stock in the S&P 500 ended lower as escalating doubts about the stability of Europe's banks roiled markets once again.

"The day started with overseas - China - that was bad," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "Then it got banged out with the consumer confidence and it all just kind of went from there."

The S&P 500 had tumbled below its 2010 intraday low of 1040.78 during the session, which analysts said could ignite further declines. The index closed at its lowest level since October 30, breaking its closing low for the year at 1050.47 - another bearish signal for markets.

"Everybody is talking about 1040, that it is the do-all, end-all, blow it up, end of the world, blood on the streets level. The market crashes, the S&P goes to 900," said Marc Pado, US market strategist at Cantor Fitzgerald & in San Francisco.

Economically sensitive sectors such as materials, industrials and financials were among the hardest hit.

Boeing slid 6.3 per cent to $US63.04 and Caterpillar shed 5.5 per cent to $US60.85. Diversified manufacturer 3M, which raised its second-quarter sales outlook last night, was not immune to the selling pressure, dipping 0.6 per cent to $US78.49.

Fears about the strength of the banking system surfaced again, with investors worried about a potential liquidity shortfall of more than 100 billion euros in the financial system as European banks repay 442 billion euros in emergency loans on Thursday.

The KBW Bank index fell 4.4 per cent and broke its 200-day moving average today at 48.00, which it had made a stand at last Thursday and Friday.

"The break of the 200-day moving average fueled more selling. Technically, this is another sign of weakness in the financials," said Elliot Spar, option market strategist at Stifel Nicolaus in Shrewsbury, New Jersey.

The CBOE volatility index, known as Wall Street's fear gauge, surged 22 percent to a session high of 35.39, its highest level since early June, in a sign more volatility could be in the offing. [ID:nN29161109]

Earlier in the day, the Conference Board corrected its leading economic index for China to an April gain of 0.3 per cent from a previously reported rise of 1.7 per cent, a sharp revision that undermined confidence in China's ability to sustain strong growth.

The correction prompted investors to turn against riskier assets, adding to a global sell-off. The Shanghai Composite Index fell 4.3 per cent to end at a 14-month low.

US consumer confidence dropped sharply in June, after rising for three months, on worries about the labor market, according to a report from the Conference Board. The news heightened fears of an economic slowdown after a recent spate of weak data from the housing and job markets.

‘‘Already under solid pressure amid the backdrop of lingering euro-area financial market concerns and a steep downward revision in a piece of Chinese economic data, global equity markets have extended losses following a much larger-than-expected drop in US consumer confidence,’’ analysts at Charles Schwab & Co said in a report.

About 11.38 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's estimated daily average of 9.65 billion.

Declining stocks outnumbered advancing ones on the New York Stock Exchange by 2,831 to 259, while on the Nasdaq, there were 2,393 declining stocks and only 279 advancers.

Reuters, AFP

Oil could hit $100 if dollar doesn't surge:

Oil could hit $100 if dollar doesn't surge:  29 Jun 2010, 0342 hrs IST,REUTER

NEW YORK: Oil could hit $100 a barrel in 2011 if the dollar does not surge against the euro as it did this year and the economies of China and India expand enough to consume at least a third of production, Bank of America Merrill Lynch said in a forecast on Monday. US oil's benchmark West Texas Intermediate (WTI) crude and London's Brent crude were both expected to average $78 a barrel in the second half of this year and $85 through 2011, BofaML's Commodity Strategist Francisco Blanch told a media briefing on the bank's half-yearly global markets outlook. "We still think oil prices will cross $100 a barrel at some point next year but not if the dollar appreciates against the euro like it did this year," Blanch said. "Every 10 percent decline in the euro results in a 15 percent decline in oil over a three-month period." Also Read  → BP oil spill costs hit $100 mn/day  → Oil cos' investors to be rewarded with good dividends  → Deregulation of prices a relief to oil industry The dollar has risen 10 percent year-to-date against a basket of major currencies. The greenback's rally last month had sparked a sharp sell-off in commodities as investors holding other monies such as the euro suddenly found dollar-denominated commodities costlier. Growth in China and India was also key to oil prices, Blanch said. "If China and India account for 35 to 40 percent of the world's growth in oil demand, then it's possible to hit $100." US crude last traded above $100 in October 2008, just before the onset of the recession. WTI's front-month contract in New York settled at $78.25 a barrel on Monday. Despite the threat to recovery from the European debt crisis, the world economy was still expected to grow by 4.4 percent this year and lend support to a cyclical, across-the-board rise in commodity prices, Blanch said. "We see a significant increase in the demand for energy and industrial commodities around the world," he said. "The commodity super-cycle is not over. It is just pausing." Even so, investors should beware of price swings, he said. "The volatility in commodity prices will remain high compared to historical averages due to structural supply and demand imbalances," Blanch said. For natural gas, BofaML said it did not expect the weakness in the commodity to dissipate any time soon due to comfortable supplies. New York-traded gas futures are down about 15 percent on the year, settling on Monday at $4.717 per million British thermal units. For copper, the bank forecast the benchmark three-month contract on the London Metal Exchange to average $7,275 a tonne this year and $8,000 a tonne in 2011, due to tighter supplies. LME copper settled at $6,869 a tonne on Monday. BofAML also said it expected gold to rally to new record highs of around $1,500 an ounce by the end of 2011 as more central banks around the world seek the precious metal for their reserves.

Funds warned over window dressing

Funds warned over window dressing
June 29, 2010 - 6:39PM
AAP

The companies watchdog and the Australian Securities Exchange (ASX) say they will closely monitor mutual fund and portfolio managers for any sign of window dressing to improve performance at the end of the financial year.

Window dressing is a  deliberate strategy of price manipulation to improve the appearance of portfolio/fund performance before presenting information to clients or shareholders.

Australian Securities and Investments Commission (ASIC) deputy chairwoman Belinda Gibson said window dressing distorted a portfolio valuation at a time that may benefit a fund manager to the detriment of current and potential unitholders.

"Investors may not only be looking at their funds performance through rose coloured glasses, they may also be paying higher performance fees than are necessary," Ms Gibson said in a statement on Tuesday.

ASIC is about to take over responsibility for the supervision of real-time trading on Australian licensed markets.

Ms Gibson said stock brokers and indirect market participants should be wary of clients placing orders close to the end of business on 30 June, which may seek to set a closing price for a security higher than would otherwise be the case.

ASIC and ASX surveillance teams would be monitoring end of financial year trading and exchanging notes, she said.

© 2010 AAP

How safe is the cash in your wallet?

By Ian Cowie Your Money Last updated: June 28th, 2010

53 Comments Comment on this article

About a tenth of the £20 notes in circulation, worth a total of £30bn, will cease to be legal tender at midnight the day after tomorrow – Wednesday, June 30. But what about other banknotes in your wallet?

That stash of foreign currency stored up from your last European holiday might not be as safe as you thought. Not all euros are the same and some might be worth more than others.

Each euro banknote’s serial number tells you which country created it. Some could be worth more than others if the Greek crisis causes debt worries to drive a wedge between northern and southern countries in the eurozone.

Worries about sovereign states’ differing abilities to repay their debts prompted world leaders at the G20 Summit in Toronto to pledge they will half their national budget deficits by 2013. But translating words into action will be a more difficult challenge for some than others. For a few, the challenge could prove simply impossible.

Now rising fears about southern European countries’ financial stability mean it could pay to be able to read the code on your euro. SomeGermans are already insisting on holding on to euros issued in their own country and passing on those backed by southern states. They know from not too distant history what it feels like to be left holding worthless paper which used to be official currency.

While it may seem far-fetched to worry about the future of one of the world’s largest currencies, the wealthy speculator George Soros expressed doubts last week and several other commentators have done so earlier.

When I called the European Union Parliament and Commission press offices in London this morning to seek their comments , none was forthcoming. To be fair, there was some sort of a fuss about eggs going on and one of the people I spoke to promised to call me back. I’ll let you know if they do.

All euros are backed by the European Central Bank but the serial numbers prefixed with X may be regarded as most secure because they are issued by Germany. N is also a good prefix, because these come from Austria. P, L, U and Z prefixes may also be favoured because these are issued by the authorities in Holland, Finland, France and Belgium.

If you share widespread fears that the euro cannot last in its present form, you might want to avoid notes with the prefixes F, G, M, S, T or Y. These are issued by Malta, Cyprus, Portugal, Italy, Ireland and Greece.

Here and now, in a long-planned move to make life difficult for forgers, about 150m British £20 notes with a picture of Edward Elgar will be replaced as legal tender on Thursday, July 1, by notes with a picture of Adam Smith. When the change was first announced during the last Labour government, I noted how apt it was that Gordon Brown should replace a great English composer with a Scots tax collector – for that was Smith’s day job before he became an economist.

The transition will no doubt be smooth and the Bank of England says it will continue to honour all the notes it has issued.

Let’s hope the same can be said of the European Central Bank and all its euros.

http://blogs.telegraph.co.uk/finance/ianmcowie/100006707/how-safe-is-the-cash-in-your-wallet/

RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve

As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve.

 

By Ambrose Evans-Pritchard, International Business Editor
Published: 5:11PM BST 27 Jun 2010

115 Comments

Entitled "Deflation: Making Sure It Doesn’t Happen Here", it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy.

The speech is best known for its irreverent one-liner: "The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost."

 

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• Gold reclaims its currency status as the global system unravels

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• America's money supply plunges at 1930s pace

• Bank on King to spot the striking similarities

Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).

Investors basking in Wall Street's V-shaped rally had assumed that this bizarre episode was over. So did the Fed, which has been shutting liquidity spigots one by one. But the latest batch of data is disturbing.

The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era.

The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7pc in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40pc in a month. This is a volatile index that can be distorted by the supply of new ships, but those who watch it as an early warning signal for China and commodities are nervous.

Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely because the Fed is soon going to have to the pull the lever on "monster" quantitative easing (QE)".

"We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable," he said in a note to investors.

Roberts said the Fed will shift tack, resorting to the 1940s strategy of capping bond yields around 2pc by force majeure said this is the option "which I personally prefer".

A recent paper by the San Francisco Fed argues that interest rates should now be minus 5pc under the bank's "rule of thumb" measure of capacity use and unemployment. The rate is currently minus 2pc when QE is factored in. You could conclude, very crudely, that the Fed must therefore buy another $2 trillion of bonds, and even more if Europe's EMU debacle goes from bad to worse. I suspect that this hints at the Bernanke view, but it is anathema to hardliners at the Kansas, Richmond, Philadephia, and Dallas Feds.

Societe Generale's uber-bear Albert Edwards said the Fed and other central banks will be forced to print more money whatever they now say, given the "stinking fiscal mess" across the developed world. "The response to the coming deflationary maelstrom will be additional money printing that will make the recent QE seem insignificant," he said.

Despite the apparent rift with Europe, the US is arguably tightening fiscal policy just as hard. Congress has cut off benefits for those unemployed beyond six months, leaving 1.3m without support. California has to slash $19bn in spending this year, as much as Greece, Portugal, Ireland, Hungary, and Romania combined. The states together must cut $112bn to comply with state laws.

The Congressional Budget Office said federal stimulus from the Obama package peaked in the first quarter. The effect will turn sharply negative by next year as tax rises automatically kick in, a net swing of 4pc of GDP. This is happening as the US housing market tips into a double-dip. New homes sales crashed 33pc to a record low of 300,000 in May after subsidies expired.

It is sobering that zero rates, QE a l'outrance, and an $800bn fiscal blitz should should have delivered so little. Just as it is sobering that Club Med bond purchases by the European Central Bank and the creation of the EU's €750bn rescue "shield" have failed to stabilize Europe's debt markets. Greek default contracts reached an all-time high of 1,125 on Friday even though the €110bn EU-IMF rescue is up and running. Are investors questioning EU solvency itself, or making a judgment on German willingness to back pledges with real money?

Clearly we are nearing the end of the "Phoney War", that phase of the global crisis when it seemed as if governments could conjure away the Great Debt. The trauma has merely been displaced from banks, auto makers, and homeowners onto the taxpayer, lifting public debt in the OECD bloc from 70pc of GDP to 100pc by next year. As the Bank for International Settlements warns, sovereign debt crises are nearing "boiling point" in half the world economy.

Fiscal largesse had its place last year. It arrested the downward spiral at a crucial moment, but that moment has passed. There is a time to love and a time to hate, a time for war and a time for peace. The Krugman doctrine of perma-deficits is ruinous - and has in fact ruined Japan. The only plausible escape route for the West is a decade of fiscal austerity offset by helicopter drops of printed money, for as long as it takes.

Some say that the Fed's QE policies have failed. I profoundly disagree. The US property market - and therefore the banks - would have imploded if the Fed had not pulled down mortgage rates so aggressively, but you can never prove a counter-factual.

The case for fresh QE is not to inflate away the debt or default on Chinese creditors by stealth devaluation. It is to prevent deflation.

Bernanke warned in that speech eight years ago that "sustained deflation can be highly destructive to a modern economy" because it leads to slow death from a rising real burden of debt.

At the time, the broad money supply war growing at 6pc and the Dallas Fed's `trimmed mean' index of core inflation was 2.2pc.

We are much nearer the tipping today. The M3 money supply has contracted by 5.5pc over the last year, and the pace is accelerating: the 'trimmed mean' index is now 0.6pc on a six-month basis, the lowest ever. America is one twist shy of a debt-deflation trap.

There is no doubt that the Fed has the tools to stop this. "Sufficient injections of money will ultimately always reverse a deflation," said Bernanke. The question is whether he can muster support for such action in the face of massive popular disgust, a Republican Fronde in Congress, and resistance from the liquidationsists at the Kansas, Philadelphia, and Richmond Feds. If he cannot, we are in grave trouble.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7857595/RBS-tells-clients-to-prepare-for-monster-money-printing-by-the-Federal-Reserve.html

Reversing Britain, a Nation in Decline

David Cameron: 'The world doesn't owe us a living'

Britain has no automatic right to prosperity, David Cameron has said, declaring: “The world doesn’t owe us a living.”

By James Kirkup, Political Correspondent
Published: 10:00PM BST 28 Jun 2010

Mr Cameron told business leaders in London that Britain has no automatic right to prosperity

The Prime Minister said many people are under the “delusion” that just because the UK has historically been one of the richest countries on earth, it will always remain so.

Only if we “reboot and rebuild” the UK economy can the country’s future prosperity be assured, he said.

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Mr Cameron used a speech to business leaders in London to argue that the spending cuts and other changes his Government is planning are not discretionary political choices but essential economic moves to stop the country falling behind its competitors.

He said: “I think too many people in this country are living under the delusion that a prosperous past guarantees a prosperous future. But it isn’t written anywhere that this country deserves a place at the top table.

He added: “It was once said that freedom once won is not won for ever; it’s like an insurance premium – each generation must renew it. Economic prosperity is the same. Just because we’ve had it before doesn’t mean we’ll automatically get it again.”

The Prime Minister said Britain will only remain a major economy if it can tackle the huge Government deficit, reform the welfare system and attract new investment from overseas.

“These three steps can help Britain to earn its living in the decades to come,” he said.

Despite warnings about the state of the public finances and their impact on the wider economy, Mr Cameron insisted he was optimistic about Britain’s long-term future.

“Ever since it was said that Britain had lost an empire but not yet found a role there has been a lot of anxiety about our future; about our declining place on the world stage and our diminishing fortunes with it,” he said. “But I passionately believe that decline is not inevitable.”

Britain is “blessed with huge advantages” such as the English language, its universities, established industries and the “ingenuity, openness and talent” of its people, he said.

He added: “These are the old advantages, and I believe there is a new one, too – a growing attitude across the country that we are going to deal with these debts and fight not just for our survival, but for our success."

• The Conservatives have gained popularity as support for their Liberal Democrat coalition partners has slumped, a new poll showed last night.

The ComRes poll put the Conservatives on 40 per cent, up from 36 per cent earlier this month. The Lib Dems fell five points to 18 per cent. Labour was on 31 per cent, up one point.

A Lost Decade for U.S. Stocks

Dec 23, 2009

I came across two charts that show the dismal performance of U.S. equities in this decade. The first chart below is from the Numbers column in the latest issue of Bloomberg Businessweek. It shows the return of the S&P 500 Index from Dec 31, 1999 through Dec. 14, 2009. The S&P 500 lost 23% in this period. During the same period market indices in developed countries like France, Finland, etc. showed relatively better performance. The main stock market indices in the Netherlands, Japan and Greece performed worse than the S&P 500.

It is interesting to note that while the S&P lost 23%, the Brazilian Bovespa Index gained an astonishing 318% during the same time frame. This is one reason why US investors should look beyond the US for better returns.

click to enlarge

Source: Bloomberg BusinessWeek

The second chart is from a Wall Street Journal December 20th article titled “Investors Hope the ’10s Beat the ‘00“. From the article:

“The U.S. stock market is wrapping up what is likely to be its worst decade ever.

In nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s.

Investors would have been better off investing in pretty much anything else, from bonds to gold or even just stuffing money under a mattress. Since the end of 1999, stocks traded on the New York Stock Exchange have lost an average of 0.5% a year thanks to the twin bear markets this decade.

The period has provided a lesson for ordinary Americans who used stocks as their primary way of saving for retirement.

Many investors were lured to the stock market by the bull market that began in the early 1980s and gained force through the 1990s. But coming out of the 1990s—when a 17.6% average annual gain made it the second-best decade in history behind the 1950s—stocks simply had gotten too expensive. Companies also pared dividends, cutting into investor returns. And in a time of financial panic like 2008, stocks were a terrible place to invest.

With two weeks to go in 2009, the declines since the end of 1999 make the last 10 years the worst calendar decade for stocks going back to the 1820s, when reliable stock market records begin, according to data compiled by Yale University finance professor William Goetzmann. He estimates it would take a 3.6% rise between now and year end for the decade to come in better than the 0.2% decline suffered by stocks during the Depression years of the 1930s.

The past decade also well underperformed other decades with major financial panics, such as in 1907 and 1893.

“The last 10 years have been a nightmare, really poor,” for U.S. stocks, said Michele Gambera, chief economist at Ibbotson Associates.”

Chart - U.S. Stocks’ Cumulative Returns by Decade

“This decade is on pace to be the worst period ever for owning stocks. On the right are the annual returns, by year and decade, for a broad measure of stock-ownership. Stock returns were even better during the Civil War and World War I than from 2000 to 2009.”

Source: WSJ


http://seekingalpha.com/article/179549-a-lost-decade-for-u-s-stocks?source=hp_wc