Musings on Markets: Data Update 2 for 2020 — Retrospective on a Disruptive Decade
This article analyzes market performance over the 2010–2019 decade, examining equity returns versus bonds, the role of interest rates, sector shifts (particularly tech/FAANG dominance), and the erosion of traditional value investing and small-cap premium assumptions. The author argues that fundamental economic factors—not central bank policy—drove low interest rates, and that conventional investment wisdom about value and size premiums no longer holds empirical support.
Metrics in this report
15.33%percent
2019
9.64%percent
2019
4.60%percent
2019 (down from 11.51% in 2009)
4.83%percent
geometric average
US stocks vs. treasury bonds, 1927–2019
4.93%percent
2020 forecast, derived from expected return minus dividend yield
6.75%percent
2020 forecast based on 1.92% risk-free rate + 4.83% ERP
22%percent
2010–2019 market capitalization increase
3.4trillion USD
2010–2019 decade
252.96%percent
2010–2019 decade (dividends reinvested)
31.22%percent
2019 (including dividends); ranked 16th best year since 1927
4.0–4.5%percent
average
Small cap vs. large cap, 1927–2019; near zero since 1980
21.97%percent
2019 (up from 19.76% in 2009; would be 30%+ if Facebook and Google were included)
5.22%percent
geometric average
US stocks, 1927–2019