The first decade of the 21st century, which has just careened to a close, will long be remembered as a time when easy money brought hard consequences.Mae West).
A time when two harrowing bear markets combined to plague the psyches of private investors for a generation -- and two modest bull markets failed to ignite widespread wealth because they were disbelieved.
The past 10 years were a time when elation and exuberance over the invention of the Internet and the birth of globalization morphed cruelly into caution and despair, and the most celebrated investment strategy of the 1990s -- buy-and-hold stocks in U.S. indexes -- was ripped to shreds.
A cleansing decadeAnd yet the past decade may have served a positive role by thrashing investors' overabundant expectations. It laid the groundwork for a decade ahead that could surprise skeptics with its ferocity of invention and growth, as the young, emerging markets to the east and south take the baton from the aging, developed markets of the west and north and create a future more promising than anyone can now imagine.
The 2000s could turn out to have been a blessing in disguise -- a searing moment of introspection over the evils of borrowing that leads to slower advances in the years to come that are better yoked to steadfast savings and realistic expectations.
As unpleasant as most of the past decade has been, the new decade is setting up with extraordinary promise and could fulfill many of the aspirations that investors believed would be theirs 10 years ago. Only not in the places that they expected and not in the way they once thought they would prefer.If so, the 2010s would turn out much like several other great decades of the past 100 years that also followed years of anguish. The 1920s, for instance, came to be known in the fullness of time as not just the nice-enough '20s but the Roaring '20s, right? Yet at the start of that decade, the mood of the world could not have been gloomier after a 10-year span that saw perhaps 30 million people die in World War I, an additional 50 million die in a global flu pandemic, all followed by a near depression that crippled General Motors, among many other companies.
Likewise, the 1980s have come to be seen as the start of a 20-year bull market that may have created more wealth through intense technological change than any in world history. And yet it began with investors in a sour mood over a decade that had seen stocks go nowhere, energy prices soar, the Middle East go up in flames, the Midwest turn into the Rust Belt and the U.S. presidency brought to its knees by corruption.
As we begin to gaze back upon the capital crimes of the decade now fading from view, to be sure we see a time when banks and industrial companies bulked up on financial steroids -- derivatives, money from nothing -- that permitted major Western stocks to hit the same high level twice and fail badly twice. Now governments have taken over the creation and dissemination of financial steroids in the form of unfunded fiscal and monetary stimuli -- more money from nothing. Does anyone really doubt that they will at least cause new valuation excesses that will take markets back to those same high levels? History may not repeat, but it has an amazing knack for imitation.
The next burst of value is not likely to come in the United States and Europe, however, as our supply of talented people has grown faster than our supply of jobs. Wages are going down, the average age is going up, and arable farmland is shrinking. And at a time when we need smart investment in physical and infrastructure more than ever, our government has decided to spend the nation's rebounding abundance on a cockeyed concept of fairness -- trying to make everyone even, regardless of merit, rather than letting the smart and ambitious use their funds to create jobs and wealth.
In South America and Asia, in contrast, governments are actively planning for their people's futures more effectively, spending their natural-resource wealth and youthful human capital to build roads, rail lines, state-of-the-art factories, hospitals and airports that will increase their productivity and competitiveness.
It's easy enough to guess that emerging-market stocks and funds -- just to make it simple, call themand -- will continue their late-2000s dominance well into the new decade. And so, too, will gold, which turned out to be the investment of the past decade, starting 2000 at around $300 and exiting at more than $1,100.
And yet a surprise in the new decade could be agricultural goods -- corn, wheat, soybeans, rice, fertilizer and seeds -- whose prices have been remarkably subdued in the past two years. As emerging markets finally exit their teen years and crest into adulthood, their rising middle class will want not just iPhones and airplanes but good food, by which I mean meat. And that requires livestock fed by grains that are abundant now but are on track to diminish steadily amid surging urbanization. If so,, which has been dead flat for the past year, may find favor. Likewise other recently quiet ag stocks: , , and .