Robo 2.0
Rememberwhenrobo
adviserswerejustfor
cheap,ready-made
portfolios?Now,it’sa
fullmenu. R3SAVING FOR COLLEGEStudentswhoare
behindonstudent-loan
paymentshaveseveral
repaymentoptions. R3–8.4%
SCOREBOARD
February2020fundperformance,
totalreturnbyfundtype.MoreonR4.
U.S.
stocks*Intl.
stocks*Bonds
(intmd.)Source: Lipper*Diversifiedfundsonly,excludingsector
andregional/countryfunds–7.2% 1 .4%
Andat WSJ.com/FundsReport:
HenryKaufmanonthe
Fed’slostfirepower.Fund Results
Mutual-fundandETF
monthlydataon
pagesR4,R6andR7andat
WSJMarkets.comwhichwas negative in the early 1930s, worked to stocks’
advantage. On a dividend- and inflation-adjusted basis,
the broad stock market had recovered from the 1929 col-
lapse by March 1937, only 7½ years later.
Fast-forward to the early 21st century. It took the
broad market similar lengths of time to recover, on a
dividend- and inflation-adjusted basis, from the 2008-09
crisis (5¼ years) and the bursting of the internet-stock
bubble (7½ years). The longest recovery time in U.S.
history was from the 1973-74 bear market: It wasn’t un-
til the end of 1984 that the broad market, on an infla-
tion- and dividend-adjusted basis, was back to where it
stood at its January 1973 peak—nearly 12 years later.
PleaseturntopageR2CHRISHONDROS/NEWSMAKERS (2)Nasdaqrose an
astonishing 85.6%
in 1999, and
continued to hit
records through
March 10, 2000.
Then, it crumbled.How unusual is it that the Nasdaq
took so long to recover?The Nasdaq’s snaillike recovery after the dot-com
crash doesn’t appear to have been unprecedented, at
first blush. For example, it wasn’t until 1954 that the
Dow Jones Industrial Average clawed its way back to
where it stood, on a point-for-point basis, before the
1929 crash—a recovery time of 25 years.
In fact, however, stocks’ real recovery from the 1929
crash took a lot less than 25 years, for three reasons:
The 30 stocks that made up the Dow were below-average
performers; dividends, which were substantial in the
1920s and 1930s, helped restore losses; and inflation,Q&AOwningtheNBA’sCeltics
isn’tlikeinvestingina
startup,saystheman
whohasdoneboth. R6I
T IS PERHAPS FITTING that
the stock market plunged last
month as we approached the 20th
anniversary of the top of the in-
ternet-stock bubble. • On March
10, 2000, the Nasdaq Composite
Index hit an intraday high of 5132.52. We all know what happened
next. By October 2002, the index had fallen 78.4%—to 1108.49. •
And that was only half the agony. The other half was the index’s ane-
mic recovery from that low. It took until November 2014 for the index
to battle back to its March 2000 level, even after taking dividends
into account. If you adjust for inflation, the
index didn’t re-
cover until August
2017, more than 17
years later.• If the
Dow Jones Indus-
trial Average were to follow the same
script, it would be trading at around 5400
in October 2022, and not make it back to
its current level until November 2034 (or,
on an inflation-adjusted basis, the summer
of 2037). It is hard to overestimate how
devastating such a scenario would be for
retirees and soon-to-be-retirees. How likely
is this scary scenario? What investment lessons can we draw with
the perspective of 20 years’ hindsight?
BYMARKHULBERT
Lessons
From the
Dot-Com
Bust
Twenty years ago,
the Nasdaq index hit a
then-record above 5000,the internet-stock peak.
Are investors anysmarternow?
INSIDE
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