See this link for studies comparing returns on stocks, bonds and commodities futures during inflationary periods:
http://www.usb.ctaguide.com/08-Facts%20&%20Fantasies.pdf

Inflation in the US has occurred in large part because of our government’s decision to increase the money supply. In doing so each dollar loses its value to a greater degree. A company will have to pay more for goods, manufacturing and distribution effectively lowering profit margins and therefore the value of its stock. This makes equity investment a poor hedge during inflationary periods.

Commodity goods such as oil, gold, foreign currencies, wheat, corn, soybeans, etc are necessary in sustaining the ever growing needs of a burgeoning society. Today these commodities are in short supply as the expanding middle class in China and India demand the same lifestyle of their Western neighbors. This trend, by most experts opinions, is expected to continue for another 7-10 yrs.

Investing a portion of one’s portfolio in commodity and/or managed futures allows one to take advantage of these bull markets while responsibly hedging against the downswing in equities.

This specific 10-year period was not the best for any investor but it could have been worse if you got out mid way. Will it be better if you stayed another 10 years?

“unless you bought this month in 1999 and didn’t add to your holdings, you’ve done better than this.”

Most people have more than a single entry point over an 8 year period.

In some ways I find the article heartening. It’s nice to know that if I had dumped all my money in a S&P500 fund at the highest point in the market 8 years ago, I didn’t do any worse than breakeven.