The Roaring 20s? Probably Not

As a student of the capital markets, I tend to group stock market events in memorable periods of time. An easy time frame to reflect upon is a decade and then working backward over the past century, ignoring detail and nuance. In other words, it’s easy to summarize each decade with only a few words.

Long-term stock market data exists going back to the 1870s, but the 1920s seem to be where many historical references begin. Maybe it’s because it was the first decade to have a “nickname,” or perhaps it’s because it ushered in many of the modern ways of living today.

2010s – Market rips on monetary policy
2000s – Two stock market crashes
1990s – Internet drives the market to new heights
1980s – Strong gains plus considerable inflation
1970s – Negative real returns
1960s – Modest gains with flat returns from ‘66-73
1950s – Economy and stock market rips post war
1940s – War-time economy and volatility but modest gains
1930s – Depression, deflation and flat market for the decade
1920s – Of course the “Roaring 20s”

While reflecting on the calendar turning to 2020, I was struck by the thought that this decade will be referred to the 20s as well, meaning one may have to clarify to which 20s they are referring. In turn, it caused me to think about how different (or similar) the next 10 years will be compared to the first “20s”.

The 1920s was a decade of great technological advancement fueling a decade that posted record productivity levels and economic growth percentages, never obtained since. Other facts from the decade include: women gaining the right to vote, the birth of Mickey Mouse, Ernest Hemingway penned “The Sun Also Rises” (which appears on my “top 10 books ever written” list by the way), and of course, the end of the decade was the beginning of the largest stock market crash in history. In reviewing numerous predictions for the upcoming decade, it is clear the “roaring” part of the decade’s namesake is unlikely to repeat itself. If anything, we may have just experienced that in the preceding decade.

With a rush of content to predict the next 10 years coming out over the last few days and months, here are a few samples that caught our attention.

Bold Predictions for the Decade Ahead
Seeking Alpha
Bleak decade ahead for stock and bond returns warns Morgan Stanley
MarketWatch, November 4, 2019
What will equity returns be for the next 10 years?
Zen Investor
Vanguard issues 19-year forecast for stock, bond market returns
Philadelphia Inquirer, January 3, 2020

Or, if you don’t feel like reading each article here is a brief synopsis:

  • The next five years are likely to see lower returns in both bonds and stocks.
  • Economic growth is likely to slow over the next decade.
  • Monetary policy will be out of moves to save markets and possibly undergo a transition to something else.
  • Other themes include an outright “crash” of the stock markets and the rise back to prominence of “active” management.

Of course, time will tell if any of these prognosticators of the future are correct, but I can’t help but wonder what the nickname of these “20s” will be?

Read more in our latest blog, Don’t Diversify This Decade: The Best Advice You Could’ve Received at the End of 2009 >