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The Wall Street Journal is making a big deal about the so-called lost decade at the S&P 500. The U.S. benchmark index, which accounts for about half of the $1-trillion (U.S.) investing in U.S. index funds, is slightly lower now than it was nine years ago – a very long losing streak that gets under investors' skin because it challenges the notion that stocks are winners over the long term.
How does Canada fare by comparison? Much, much better, but largely because of commodities. Over the past nine years – the same period of time the Wall Street Journal used – the S&P/TSX composite index has risen more than 100 per cent. The energy sub-index rose 750 per cent over this period and materials rose more than 400 per cent.
Even if you measure the performance from the index's peak, in 2000, the S&P/TSX composite index is still up more than 20 per cent. The total gains rise to 40 per cent after dividends are factored in.
Of course, if you didn't invest in the index and you avoided commodities as a passing trend, then your returns are probably closer to the S&P 500's – a lost decade.
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