Investors enjoy a bull market for the ages — but many are left out

Washington — The U.S. stock market is set to conclude the decade near record highs, a financial boom that emerged from the wreckage of the financial crisis but left on the sidelines the millions of Americans without money to invest.

The Standard & Poor’s 500 index, which tracks the biggest American companies, has enjoyed a total return of about 256 percent, or 13.5 percent annually, since the beginning of 2010, according to Howard Silverblatt, senior index analyst at the S&P Dow Jones Indices. That compares with an average annual total return, including dividends, of 10.3 percent since the 1920s, he said.

That means someone who had $10,000 in the S&P 500 at the start of the decade will end it with close to $36,000. In 2019 alone, investors are set to see a total return of more than 30 percent.

The stock market has contributed to a high degree of economic satisfaction across America, on top of a very low unemployment rate and modest but steady economic growth, surveys show. People who got into the market early in the decade, or even joined more lately, will have seen their retirement assets, college savings and other investments increase measurably.

“If you owned stocks, bonds, real estate, hard assets, you benefited,” said Michael Farr, president of Farr, Miller & Washington, an investment firm in Washington. “Prices on everything from parking lots to publicly traded equities went dramatically higher.”

Yet not only did the prosperous decade leave many Americans behind — 52 percent of Americans own stocks, largely through retirement accounts, according to the latest Federal Reserve data — it also fits into a much more uneven economic picture.

Jared Bernstein, a senior fellow at the left-leaning Center on Budget and Policy Priorities, acknowledged that people who owned stocks did well. “But when you are talking about the

equity markets, you are talking about the top half of the population. The bottom half of households don’t own stocks,” he said.

Emerging financial challenges such as the explosion of student debt, and until the past few years highly disappointing levels of wage growth, meant many Americans may have had less to invest in the first place.

“Unfortunately, the bulk of investors don’t have enough money in their retirement accounts to retire on, even though they just lived through a fantastic decade,” said Daniel

Wiener, chairman of Adviser Investments.

In addition, Americans who sold in the financial crisis of 2007-2009, or lost their home to foreclosure, would not have had as much of a chance to take part in this decade’s boom. Retirees who shifted money into fixed-income accounts saw paltry returns as interest rates sat at historic lows.

“People who retired and thought they would live on their fixed income have become Walmart greeters because the income wasn’t enough,” said Nancy Tengler of Tengler Wealth Management.

Even those who did enjoy the roaring markets may look at the five- and 10-year returns on their investment accounts and formulate unrealistic expectations about what the future might hold.

According to S&P data starting in 1930s, the best decade was the 1950s, when the market had a 19.21 percent average annual total return. The worst was the 2000 through 2009, when the S&P fell, on average, 0.86 percent. The 2010-2019 decade is the fourth-best since the 1930s, the data show.

The starting point for this decade’s boom was the recovery from a massive financial crisis and the deepest recession since the Great Depression. What followed were extraordinary levels of action by policymakers to lift the economy and the markets.

That included trillions of dollars in public spending, authorized by members of both parties; a sizable corporate tax cut; and an unprecedented campaign by the Federal Reserve to boost economic growth and asset prices through low interest rates and other means.

Those policies continued under the Trump administration, which pushed through another massive tax cut. Meanwhile, after raising rates for several years, the Fed began cutting them again in 2019, moves that helped the markets break records.

Soaring markets have minted a new generation of millionaires, aided by high-growth technology companies such as Apple and Netflix.

The number of households worth $1 million, not including their primary residence, grew to 11.8 million as of one year ago, according to the Spectrem Group, a Chicago-based market research firm. That is an increase of 51 percent over 2009, with 2019 yet to be counted.

“The decade was about the capitalists,” said Joseph LaVorgna, chief economist of the Americas at Natixis. “People who own capital did the best.”

Technology stocks were the market’s story of the decade. Apple, Microsoft and Amazon, founded by Washington Post owner Jeff Bezos, became the first American companies to crack the $1 trillion mark in total stock value.

The sector far outperformed any other category in the S&P 500, tripling its worth over the last 10 years to more than $6 trillion, according to the S&P data.