Rewards1: A Lost Decade of Returns Lies Ahead

A Lost Decade of Returns Lies Ahead

"I lost $40 million."

I remember reading those words from a subscriber email in 2002.

He sold his company in 2000 for $40 million and plowed all his money into the stock market. He didn't buy the S&P 500. He bought the top internet stocks of the day.

Just two years later, as the dot-com bubble burst, he lost everything.

Friends, I am here to tell you we're very close to that type of market top again.

I don't know about you… But there's no way I'm letting the fortune I've built over the last 10 years get vaporized by my greed for more.

You have to know when it's time to go on the defensive. And I'm telling you, the time is now.

I don't care if I'm early. People who stayed too long in the S&P 500 in 2000 had to wait 13 years to get back to even.

Some folks – like the fellow I mentioned above – never recovered.

I'd rather be a year or two early on my call than 13 years too late – especially when I don't have to give up any potential upside still left in stocks.

I'll explain what I mean by that in a moment.

I want you to remember a simple phrase that could save your portfolio over the next decade: "The higher the P/E, the lower the return."

It's not sexy. It's not sensational. But it's absolutely true. And right now, almost nobody on Wall Street wants to talk about it.

Instead, they want to sell you the fantasy that the next 10 years will look just like the last 10. That if you just "stay the course" with your index funds and long-dated bonds, you'll be fine.

They're wrong. Dangerously wrong.

We're sitting on the edge of a new market regime – a slow-motion shift that will crush passive investors who aren't paying attention.

Let me show you why.

A 48% Warning Sign

In January 2025, the S&P 500 started the year with a forward price-to-earnings (P/E) ratio of 22. As of this writing, the forward P/E of the S&P 500 is about 19.

Based on the January peak of 22, that's a rise of 48% from 2014 levels.

What does that mean?

It means investors have been paying as much as 22x next year's earnings to own the market. That's not completely irrational – after all, the last decade was great for stocks.

But it is dangerous when we could be facing a serious decline in corporate profits due to tariffs and a general pullback in consumer and corporate confidence.

History is clear: When you buy the S&P 500 at a high forward P/E this late in a bull market cycle, your long-term returns get crushed.

Let me show you what happened the last time the market got expensive right as corporate earnings crumbled….

In 2000, the forward P/E hit 24.4. What followed? A "lost decade" with total returns coming in at about -4.3% for the decade.

The S&P 500 didn't get back to even (on an inflation-adjusted basis) until 2013.

Widely held stocks like Cisco Systems (CSCO), Sun Microsystems (JAVA), AOL (AOL), and Intel (INTC) never recovered in price.

Even non-tech blue chips got crushed… With companies like Walmart (WMT), Coca-Cola (KO), and Merck (MRK) taking as long as 12 years, 15 years, and 21 years, respectively, to get back to even.

So what should we expect from this year's starting point of 22x earnings? History suggests you're looking at 3% to 5% per year over the next decade.

Let that sink in.

The Illusion of Safety

The problem is that traditional portfolios – your basic 60/40 mix of stocks and long-term bonds – aren't built for this kind of environment.

Long-term bonds have been torched by inflation. Over the last three-year and five-year periods, they have been down 8.65% and 8.96%, respectively, as measured by the iShares 20+ year Treasury Bond ETF (TLT).

Stocks are already getting clobbered lower because Wall Street knows earnings growth will be tough.

But what is Wall Street telling you? "Hold on and hope."

Friends, hope is not a strategy.

That's why I've been building a new framework for investors who want to outrun the return crunch.

One that works if the market goes sideways… If inflation sticks around… Or even if the Federal Reserve loses control entirely.

My Three-Part Return Crunch Escape Plan

My plan to outrun the return crunch is three-fold:

Step 1: Own High-Resilience Dividend Stocks

These companies don't need bull markets to thrive. They pay you real cash, year after year, no matter what the headlines say.

Historically, these stocks have outperformed during secular bear markets and outpaced inflation.

I'm talking about the companies that quietly compound 6-8% dividend growth annually, while paying out 3-5% yields.

You won't see them featured on CNBC. But they're the tortoises that beat the hares when it counts.

Step 2: Add a 10-20% Bitcoin Allocation

When traditional markets fail, you want exposure to "outside assets."

In the 1970s, that was gold. Since 2009, it's been bitcoin.

These are the assets that benefit when the system breaks down – when trust erodes and money itself comes under pressure.

I'm not saying sell everything and go all-in on crypto. But a 10-20% allocation? That's the kind of asymmetric bet that changes your life.

And if I'm completely wrong about the direction of the stock market, we don't give up any upside.

This is the key to this strategy outperforming the S&P 500…

Anything that boosts stocks – such as loose monetary policy or soaring consumer sentiment – gets magnified in the bitcoin market.

A 10-20% allocation to bitcoin married to a low-risk blue-chip dividend-paying portfolio will far outpace a 100% allocation to the S&P 500. And it will do it with far less risk.

Especially if earnings fall off a cliff, and we slip into a 13-year bear market like we saw between 2000-2013.

Take a look at the table below to see the five-year rolling returns of bitcoin vs. the S&P 500.

You can see that bitcoin typically returns 5-10x the return of just holding the S&P 500.

That means we'll get almost all the upside of holding the S&P 500 by just owning a 10-20% allocation in bitcoin. We'll pick up another 9% per year (on average) from our blue-chip dividend stocks.

This is how you want to be positioned for the next 10 years if you want to avoid a lost decade of returns.

Step 3: Park Some Dry Powder in SGOV

Today's 4%-plus yields on short-term government bonds are a gift. This is where you hold your ammo. It lets you sleep at night and gives you the freedom to buy when others panic.

That's why I like the iShares 0-3 Month Treasury Bond ETF (SGOV). Unlike many other bond funds – which hold long-term debt that is highly sensitive to interest rate changes – SGOV holds short-term debt.

The benefit of owning short-term bonds is your investment isn't impacted by rate changes. If they go down, you just earn less income each month. But your initial capital is preserved.

On the other hand, long-term bonds lose value as rates increase. By owning the short end of the curve, we're eliminating risk associated with changes in rates.

It's not sexy. It doesn't make headlines. But it's smart. And smart wins over the long run.

The New Reality

You don't need to swing for the fences. You don't need to guess the Fed's next move. But you do need to stop pretending the old playbook still works.

The return crunch is real. The math doesn't lie. And if you want different results, you need a different strategy.

I'm already repositioning my personal portfolio within this framework. I'm helping my readers do the same. And if you're serious about protecting and growing your wealth over the next 10 years… you should, too.

Because it's not about timing the top.

It's about surviving the plateau that comes after.

Let the Game Come to You!

Teeka Tiwari

P.S. Friends, we could be entering a "Lost Decade of Wealth." I know that sounds scary for many of you. But as I've outlined above, I have a gameplan to navigate us through the next 10 years so that we come out on the other side better off than we go in.

To better position you for the coming years, I'd appreciate your feedback. So please reply to this email with your questions and comments. And feel free to share this essay with your friends and family members, so they, too, have the blueprint to sidestep this Lost Decade of Wealth.