{"id":21952,"date":"2023-11-08T23:56:00","date_gmt":"2023-11-08T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=21952"},"modified":"2025-05-08T16:10:08","modified_gmt":"2025-05-08T08:10:08","slug":"zero-returns-inflation","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/08\/zero-returns-inflation\/","title":{"rendered":"U.S. stocks have experienced zero returns twice in more than a decade due to inflation"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/08\/zero-returns-inflation\/#Set_reasonable_expectations\" >Set reasonable expectations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/08\/zero-returns-inflation\/#US_stocks_experienced_zero_returns_twice\" >U.S. stocks experienced zero returns twice<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/08\/zero-returns-inflation\/#Warren_Buffett\" >Warren Buffett<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/08\/zero-returns-inflation\/#Charles_Ellis\" >Charles Ellis<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/08\/zero-returns-inflation\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Set_reasonable_expectations\"><\/span>Set reasonable expectations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Countless investment gurus believe that everyone has too high expectations for stock market returns and is too impatient. If the mid- to long-term stock market can achieve an average annual real research return of 4% to 5% (excluding inflation), it will be quite good.<\/p>\n\n\n\n<p>Charles Ellis, in his famous book &#8220;<a href=\"https:\/\/www.amazon.com\/Winning-Losers-Game-6th-Strategies\/dp\/0071813659\" target=\"_blank\" rel=\"noreferrer noopener\">Winning the Loser&#8217;s Game<\/a>&#8220;, Ellis said a sobering famous saying in the investment community: &#8220;The biggest mistake investors make is trying to beat the market!&#8221;.<\/p>\n\n\n\n<p>Investors can use the free online query tool provided in my post &#8220;&#8221;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/11\/sp-500-index-querier\/\" target=\"_blank\" rel=\"noreferrer noopener\">Querier to Annualized rate of return for S&amp;P 500 Index<\/a>&#8221; to find out what the long-term average market return of U.S. stocks is.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"US_stocks_experienced_zero_returns_twice\"><\/span>U.S. stocks experienced zero returns twice<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Warren_Buffett\"><\/span>Warren Buffett<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In &#8220;Buffett&#8217;s most important original book &#8220;Tap Dancing to Work&#8221;&#8221;, Buffett said: The Dow Jones Industrial Average was 874.12 points on December 31, 1964, 875.00 points on December 31, 198.<\/p>\n\n\n\n<p>In 2012, when this book was completed, from 1999 to 2012, the annualized return of the Dow Jones Industrial Index was only 3.32%, and the S&amp;P 500 Index was only 1.26%!<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Charles_Ellis\"><\/span>Charles Ellis<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Charles Ellis talked about several sobering figures in his famous book &#8220;<a href=\"https:\/\/www.amazon.com\/Winning-Losers-Game-6th-Strategies\/dp\/0071813659\" target=\"_blank\" rel=\"noreferrer noopener\">Winning the Loser&#8217;s Game<\/a>&#8220;. For example, the Dow Jones Index was at 1,000 points during the 14-year periods of 1968 and 1982, and was at 875 points at the end of 1964 and 1981. In other words, during those 17 long years, although corporate profits increased significantly, the stock market made no progress. The reason is that inflation has increased interest rates from 4% to 15%, which has significantly reduced the price-to-earnings ratio.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"135\" height=\"136\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2023\/10\/zro-1600x1200-1.jpg\" alt=\"zero return\" class=\"wp-image-21953\"\/><figcaption class=\"wp-element-caption\">credit: istockphoto.com<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/04\/27\/tap-dancing-to-work\/\">Buffett&#8217;s most important original book &#8220;Tap Dancing to Work&#8221;<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/08\/zero-returns-inflation\/\">U.S. stocks have experienced zero returns twice in more than a decade due to inflation &#8211; Andy Lin&#8217;s Long-term Stock Investment Blog<\/a><\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/11\/sp-500-index-querier\/\" target=\"_blank\" rel=\"noreferrer noopener\">Querier to Annualized rate of return for S&amp;P 500 Index<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/19\/us-inflation-rate-querier\/\" target=\"_blank\" rel=\"noreferrer noopener\">Querier of US Inflation Rate<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/27\/inflation-reduction-act\/\">The impact of the Inflation Reduction Act on US stocks<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/06\/12\/inflation-proof-investments\/\">Inflation-proof investments<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/09\/29\/inflation-and-rate\/\">Tax, inflation and rate are the top three serious killers to investors<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/03\/14\/stock-prices-vs-inflation\/\">Why do stock prices automatically rise with inflation?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/04\/how-investors-should-look-at-economic-trends-and-forecasts\/\">How investors should look at economic trends and forecasts?<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>U.S. stocks have experienced zero returns twice in more than a decade due to inflation &#8211; 1968 to 1982 and 1964 to 1981<\/p>\n","protected":false},"author":1,"featured_media":21953,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[405,737,54,11],"tags":[],"class_list":["post-21952","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-inflation","category-charles-ellis","category-generic-us-stock-knowledge","category-buffett"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/21952","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=21952"}],"version-history":[{"count":9,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/21952\/revisions"}],"predecessor-version":[{"id":36093,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/21952\/revisions\/36093"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/21953"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=21952"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=21952"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=21952"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}