To make things more sane, let's just look at the markets post April 2003.
So here's what I notice.
- These are all indexes (duh), we're not talking about playing the market.
- VEIEX is a fund pegged to the MSCI Emerging Markets Index. You should follow that link, the list of countries is interesting.
- VGTSX is pegged to Vanguard's Total International Composite Index, which tracks the Emerging Markets Index, along with indexes of more "stable" exchanges for Europe and the Pacific.
- Post 2000, NASDAQ and the S&P have been basically equivalent in terms of yield at this scale.
- Post 2003 nothing really beats emerging markets or even comes close. The success of global markets is largely driven by this portion of the index. Developed economies don't even do that much to soften the bumpiness of the ride. The trend isn't slowing, either.
- But during the tech boom of the turn of century, emerging markets were seriously flailing (why?). You'd have to hold them for nearly eight years to even break even.
- The one I don't get is the Amex Composite Index (XAX). You never lost a lot of money on this index -- not even during 2001/2002 when everyone else burned. Sure, it didn't keep up with NASDAQ when it exploded in '99. And yet you saw gains -- almost at pace with the overall economy. After 2003 it's almost kept pace with global markets, but *still more stable* -- compare the graphs for May/June 2006, for example. ETFs are the key.
But how do you invest in .XAX?