Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition

Preface to the 10th Anniversary Edition

What a difference a decade can make! And in the first decade of the third millennium—the decade that followed the 1999 publication of the original edition of Common Sense on Mutual Funds—the difference was extraordinary. During the two preceding decades, the U.S. stock market had experienced the highest returns—averaging 17 percent per year—in its two-century history. During the past decade, with major bear markets in 2000–2002 and 2007–2009, stock returns turned negative on balance—minus 1.5 percent per year, one of the two lowest returns recorded for any decade during that two-century span.

Similarly, our economy moved from an era of prosperity that was long and strong to a new era of unknown length, beginning with the sharp recession of 2008–2009—now seemingly coming to a close—followed by a sober recovery in which the "new normal" of real (inflation-adjusted) economic growth will likely look more like 2 percent per year than the "old normal" of 3 percent that characterized our economy over the preceding century.

Those are just a few examples of how our world has changed. Globalization is now taken for granted. War—indeed, wars—have followed peace. Political change has been rife, as Democratic leadership has superseded Republican leadership in our federal government. Borrowing has soared to unprecedented and unsustainable levels. But while our citizens strive to reduce their debt levels, the federal debt is virtually exploding upward, with ...