Our 4th quarter letter always presents a bit of a conundrum—it’s the end-of-year issue, yet typically being written as the New Year commences. And that brain-teaser is further amplified by this, our 2009 edition… is it the end of the decade, or do we have another year to go? Here’s one vote for it being the end of the 00’s decade, which certainly lived up to its moniker when viewed through the prism of investment results.

The writer was reminded of an earlier piece, penned back in the 2nd quarter of 2006, at which time there were indications that the “00’s were shaping up to be the worst decade since the 30’s,” according to Ed Hyman of International Strategy & Investment. Well, with the results almost in by December 20, 2009, Tom Lauricella of WSJ.com felt confident enough to lead with this sub-header: “Since End of 1999, U.S. Stocks’ Performance Has Been the All-Time Clunker; Even 1930s Beat It.” Lauricella further notes that, “Many financial plans assume a 10% annual return for stocks over the long term, but over the last 20 years, the S&P 500 is registering 8.2%.”

That last number brought to mind another 2006 discourse on a recurring subject, investment costs. Appearing, too, in the 4th quarter of that year—with hopes that readers might resolve to be attentive to this one elemental certainty in their investing—we posited a steady 8% return compounded over 20 years and what remained after the application of fees (for those interested, we would suggest going to the “Investor Intelligence” section of our website and then to our Newsletter Archive, or one can download the PDF directly here). Still “ranting” after all these years, we now present similar information, but this time predicated on the S&P’s performance over the past 10 years—while the news isn’t pretty, insult is added to injury the higher the fee:

We ended that 2006 4th quarter column by pointing out that our fees commence at 0.9%. We’ll end this one by saying, Happy 2010 to all and good riddance to the 00’s!
—Geordie French