I recently came across the following table in a trade journal (Morningstar Advisor), and I thought it fit nicely with my previous gold-related post.  Incidentally, this data came under the heading "Gold No Match for Long-Term Returns of Stocks".  The primary point here is that investors would be in a very bad way if they had only invested in gold for any long-term period.  For example $1 invested in stocks in 1980 would now be about $25.  Invested in gold, it would be just over $2.

That point can be extended to a word of caution regarding the reversion to the mean that I discussed in the previous post.  Returns for the S&P 500 from January, 1926 to December, 1999 averaged 11.3% per year (smaller stocks did better).  Obviously, recent years have had a negative impact on the longer-term returns. Of course, the performance of stocks leading up to the past decade was bubble-like, and that wasn't going to last forever.  Take another look at this table, and the outsized returns enjoyed by gold investors over the past 10 years.  Keep in mind that the 2% average annual return over 30 years includes the recent frothy returns.  Again, there are a lot of factors that will affect the prices of these asset classes in the short-term, but if you believe in the idea that returns generally revert to the mean, gold is a scary place to have a big bet.