In Financial Advisor magazine interview, Vanguard’s Fran Kinniry raised a very interesting point about what investors are likely to see in their portfolios. Here’s an excerpt:

“What’s happened is that the strong positive returns of the fourth quarter of 1998 are rolling out of the ten-year performance numbers and being replaced by the staggering losses of the fourth quarter of 2008. If that weren’t bad enough, the outsized bull market returns of 1999 will also be winding out of the decade performance numbers in 2009, to be replaced by the bear market numbers of 2000, 2001 and 2002.

As a result, stocks are likely to show losses for ten-year rolling periods in the quarters and years that lie ahead. Kinniry thus fears investors will conclude that stocks in the long run do not pay off.”

How are you going to market that one, mutual fund industry?

And what is going to be the reaction by investors when they see their March quarterly statements? I’ve had this (expletive) fund for 10 years and I lost money? You have got to be kidding! Sell this (expletive) right now!

As I alluded in my column today ( I think we’ve had our capitulation already but this might be the last straw that sets the low a la October 2002. I think that bear ended in July 2002 (you have to look at the bar chart of the S&P 500 with NYSE volume to see it) even though it made a lower low a few months later.