What is a Lost Decade?

A "Lost Decade" refers to a 10-year period in which the stock market no growth. It does not necessarily mean 10 straight years of negative returns, but rather continued volatility with multiple downturns in the beginning and end of the period. 

One of the more recent examples of this infamous feat ended in 2010. The United States experienced a "Lost Decade" in its stock market starting in 2000. It was characterized by significant market volatility and a lack of overall growth. (Source: US News)

• Major events like the Dot-com bubble and the 2008 housing crisis contributed to a prolonged period of economic downturn and stagnation.

Past performance is not indicative of future returns. You cannot invest directly in an index. All indices are unmanaged and do not include fees or expenses. Please see the back of this presentation for index definitions and disclosures.
Source: Lincoln Financial Group Market Intel Exchange; FactSet, Standard & Poor’s. Data as of August 31, 2023. Dividend yield is calculated as consensus estimates of dividends for the next 12 months, divided by most recent price, as provided by Compustat. Forward price-to-earnings ratio is a bottom-up calculation based on the most recent S&P 500 Index price, divided by consensus estimates for earnings in the next 12 months (NTM). The S&P 500® Price Return Index tracks the stock performance of 500 large U.S. companies. The index used is a price index and does not reflect dividends paid on the underlying stocks.

Picture Yourself:

For those who were age 55 in 2000, they found themselves on the forefront of ending a successful career and looking forward to spending time traveling, on the golf course, and with the grandkids. However, they didn’t expect a lack of growth in their retirement accounts.

Fast forward almost a decade, the very same group had planned to retire at 65, but in most cases, had the same amount saved as they did when they were 55.

This time period serves a harsh reminder…

The importance of prudent financial planning and the need to weather market downturns is imminent.  Highlighted by diversification & protected growth, a key strategy that helps reduce risk by spreading investments across different asset classes.

During this challenging period, investors who had a well-structured and diversified portfolio were better positioned to withstand the storm. 

• By allocating their assets across stocks, bonds, real estate, and other investment vehicles, they were able to mitigate the impact of the stock market decline. 
• Those who diligently maintained their long-term focus and resisted the urge to make emotional decisions benefited from the eventual market recovery.

What can you do to help avoid a “Lost Decade”?

Analyze your risk: Take inventory of your current risk exposure and see where you may lose in the event of a market crash. Utilize our Portfolio DeepScan® tool to test your assets against a 2008 scenario. 

Check your pacing: Protecting your assets may be more of a priority than growth at this point in your life-- but only if you're on pace. Use our Financial Wellness Checkpoint to see if you're on pace to your retirement goal!

Establish a Resilient Retirement® strategy: a Resilient Retirement® is a personalized investment strategy built to withstand a market crash and is included in ALL RetireUS subscriptions. 

This article is provided by McAdam LLC (“McAdam” or the “Firm”) for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. No portion of this article is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax, or legal advice. Certain information contained in this report is derived from sources that McAdam believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages. This article is the sole opinion of this individual and is not indicative of the firm’s belief.