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Letter Re: The US Stock Market--A Net Loss for Investors Since 1999

Mr. Rawles,
In all the discussion about the [US] supreme court [Second Amendment] ruling, today's stock market plunge may have been overlooked. The Dow Jones Industrial Average closed at 11453.42. That's just over half a point gain to date for the millennium. On December 10, 1999, (8-1/2 years ago) the Dow closed at 11452.86. In the years since then, our country has grown by tens of millions of people, and the most optimistic estimates of inflation average 2-to-3% annually. But the market is up only 0.005%.
As [the pop music singer] Prince might say, "Party like it's 1929." - Robert E.

JWR Replies: You are correct in your observation that on average, US stock market investors have lost ground to inflation since late 1999. There have been some noteworthy exceptions, but almost like walking in the doors of a casino, the law of averages has been against US equities investors. There is an old saying on Wall Street: "Nobody beats the bear." With the current economic climate, I don't expect the outlook for stocks to improve. In fact, given the collapse of the global credit market since the summer of Aught Seven, I wouldn't be surprised to see outright collapse of the stock market.

If, instead of stocks, someone had bought silver in December of 1999, they would presently be miles ahead . In December of 1999, silver was selling for around $5.25 per ounce.When I last checked, it as at $17.37 per ounce--well over a 300% gain.

If someone had bought bulk military surplus .308 (7.62 mm NATO) ammunition in December of 1999 it would have cost as a little as $219 per 1,000 rounds in sealed "battle packs". Identical ammunition now sells for as much as $610 per thousand.

If someone had bought bulk hard red winter wheat in December of 1999 it would have cost around $10.80 per 100 pounds, if purchased in 50 pound sacks. It now sells for $23 to $29 per hundredweight, if you can find it. (OBTW, if you call any of the big food storage food vendors like Walton Feed, they will likely tell you that they presently don't sell what in bulk sacks. They are probably setting aside the little that they have left to nitrogen pack in #10 cans.)

The coming decade will likely be the decade of "I Told You So", for survivalists. For now, and for at least for the next few years tangibles will rule!

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