Barely. And with a tremendously rocky ride.
Spurred by the most recent weekly piece by John Hussman (hussmanfunds.com), I checked the yearly and cumulative nominal total return figures for the S&P 500 and a few US Government bond indices since 2000. The results can be found in the table below (data from December 31 1999 to February 27 2015):
|Annual Return||Cumulative Return|
|S&P 500 Total Return||4.4%||91.3%|
|US Government 1-3 Years||3.4%||64.9%|
|US Government 3-5 Years||4.9%||107.7%|
|US Government 5-7 Years||5.9%||138.8%|
|US Government 7-10 Years||6.5%||160.1%|
|US Government 10+ Years||8.5%||243.0%|
|US Government All >1 Year||5.5%||126.5%|
Source: Bloomberg; Bloomberg/EFFAS US fixed income indices.
Apart from the shortest maturity bucket, all Government maturities provided a better return than large-cap equities; in the case of the longest bond maturities – arguably the only ones comparable to equities in terms of price risk and duration – substantially better.
During the period in question, the S&P had two negative runs of about 50% each: one, of -47.4%, from September 2000 to October 2002; another, of -55.3%, from October 2007 to March 2009. Remember: these are nominal total return figures, which include dividends (reinvested immediately in the index) but not the impact of inflation.
As Hussman points out, the performance of the S&P has been achieved only because current prices have reached valuations that represent the second most expensive level historically recorded. The following graph is taken from a recent publication of Doug Short (dshort.com). While it certainly does not provide a trading signal or an indication that prices will soon revert to more acceptable levels, it does warn of likely very low returns for equities over the next 5-10 years. That is, if you can keep still while the ride evolves and/or if you have the ability to pick tops and bottoms – two very big “ifs”.
Photo source: http://fineartamerica.com.