Falling stocks have absolutely killed investors in the past few months. Yet although the recent panic has inflicted a lot of short-term pain, the real bad news has a much longer scope -- and will be around, in all likelihood, for at least a few more years.

Last month, the S&P 500 finally slipped under its levels from a decade ago. And now, the SPDR Trust, which tracks the S&P, has a negative total return for the past 10 years -- even when you include dividends.

A grim anniversary
In many investors' eyes, that's a decade of hard work and self-control wasted. While they've seen government officials and economists focus most of their attention on big Wall Street firms and struggling homeowners -- some of whom took mortgages they knew they couldn't afford -- ordinary investors have seen their prudent behavior amount to nothing.

In fact, for many, it's amounted to less than nothing. Consider how these stocks have done over the past 10 years:


10-Year Average Annual Return

Disney (NYSE:DIS)


Big Lots (NYSE:BIG)


Coca-Cola (NYSE:KO)


Lennar (NYSE:LEN)


Honeywell (NYSE:HON)


Time Warner (NYSE:TWX)


Eli Lilly (NYSE:LLY)


Source: Yahoo! Finance, as of market close on Nov. 11, 2008.

Those negative returns are especially annoying when you think about the risks you took to get them. You endured one full bear market -- and at least the beginning of a second. You want to get the reward for taking that risk -- but there's no reward right now.

What might have been
Even more irritating is that you could have gotten so much more by taking a lot less risk. Here are some of the alternatives you could have picked:

  • An ultra-safe Treasury money market fund has earned an average of about 3.2% annually since 1998.
  • In 1998, you could have bought a 10-year bond from the Treasury yielding more than 4.8%.
  • An inflation-adjusted Treasury note auctioned in 1998 yielded 3.65%, not including inflation adjustments.

And those are guaranteed returns, with no risk at all. Some riskier investments did much better. Gold, for instance, traded around $300 an ounce in 1998 -- today it's above $700. Silver was around $5 -- now it's around $9.50.

Moreover, that doesn't even include the money you invested between then and now. Along the way, you probably paid more than you did 10 years ago for some of your shares. Those investments are sitting on even bigger losses.

Because of this, some now say stocks are a sucker's game. But if you believe that, then call me a sucker -- because I'm still not buying it.

The rest of the story
There are two problems with concluding that it's not worth it to invest in stocks. First, from now until 2010, you'll be making comparisons against an ever-increasing historical number from the late-'90s boom -- a boom that we now know was completely unsustainable. That's no comfort if you made regular investments when the S&P was 50% or more above where it is now -- but it helps put the current losses into context.

More importantly, though, investing is about looking forward. Regardless of what happened in the past, the prospects for businesses going forward are what's important in making investing decisions today.

The fundamental question you have to ask yourself is whether you believe that all of the media hype about the possible end of the financial world is actually going to prove true. If you do, then you can feel absolutely justified in dumping everything and moving to cash -- or buying shares of your favorite short fund.

But if you think the world will find ways to move past the current troubles and that businesses will continue to produce goods and services that people want, then investing in the shares of those companies will continue to give you a chance to make your money multiply much faster than bank accounts, Treasuries, or other "safe" investments.

So far, the world's always found a way. And although there's always a first time, I'm not willing to make the bet that it'll be different this time.

For more on interesting ways to invest now, read about:

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Fool contributor Dan Caplinger is still on course. He doesn't own shares of the stocks mentioned in this article. Eli Lilly is a Motley Fool Income Investor selection. Coca-Cola is a Motley Fool Inside Value pick. Disney is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. The Fool's disclosure policy tells it like it is.