If Japan had The Lost Decade, have we just lived through The Dirty Dozen?
The financial media was all over the news that the major market indices hit levels yesterday that were last seen in 1997. The assumption is brutal. We have simply taken 12 years to complete a roundtrip to nowhere.
Thankfully for investors, it's far from the truth. If you've had your eyes open in that time -- and I know you have, because they're open right now reading this -- you have probably learned plenty.
Let's go over a few of the lessons that I'm walking away with.
1. Not all stocks are alike
We all didn't walk around in a big, fat circle over the past 12 years. Some of the market's popular growth stocks, like Google
More to the point, Google went public at $85 a share in 2004. Baidu followed a year later with its market debut at $27 a share. Both of the world's leading search engines have been slammed recently, but they have still roughly quadrupled off their IPO prices.
Even companies that were around 12 years ago have evolved. Adjusted for splits, Apple
The opposite is also true. There are plenty of stocks that are trading lower and many that have gone away. In other words, it's always a stock picker's market. Don't let the S&P 500 or Dow chart sway you, even if you only invest in index funds (read on to find out why).
2. Dividends matter
There should be an asterisk next to claims that the market is back where it was a dozen years ago, and not because it's been juiced up on steroids. An index itself isn't adjusted for dividends.
Payouts may not seem like much, but they do add up over time. And these days -- let's face it -- even a meager yield is probably more than savers are getting out of their money market funds.
A company's ability to keep paying its quarterly distributions is important. JPMorgan Chase
3. We live in a global marketplace
An investor could have gotten away with a diversified portfolio in 1997 just by plucking stateside securities. If an investor wanted a little pop from abroad, companies like Coca-Cola could fit the bill.
Thanks to advances in cheap online trading and foreign market sentiment, investors today have easier access to many of the world's exchanges. The Motley Fool Rule Breakers newsletter has eight different Chinese growth-stock recommendations on its scorecard, something that would have been impossible 12 years ago.
Baidu is there, naturally. So is Mindray Medical
Yes, our market is down this year. However, Shanghai is bucking the trend by sporting healthy year-to-date gains. I'm not suggesting that Mindray Medical and Baidu belong in your portfolio. These are international growth stocks for investors who can appreciate the related risks and returns. However, even a conservative investor should consider a little global diversification through an international mutual fund.
It's just one more way to disconnect from the flawed assumption that we have all done nothing since 1997.
We haven't, even if the recent losses certainly do sting.
Other articles to read before another 12 years pass you by:
JPMorgan Chase is a Motley Fool Income Investor recommendation. Coca-Cola is a Motley Fool Inside Value selection. Mindray Medical International, Google, and Baidu are Motley Fool Rule Breakers selections. Apple is a Motley Fool Stock Advisor pick. The Fool owns shares of Mindray Medical. Try any of our Foolish newsletters today, free for 30 days.
Longtime Fool contributor Rick Munarriz remembers feeling so much younger -- but not really smarter -- in 1997. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.