The quick and dirty is that he blames Wall Street for rigging the game, having no regard for anyone but themselves, having stolen 20% from you over the last decade and he expects Wall Street to steal another 20% (or similar number) in the new decade.
Before you blow him off completely you should read the article. There are a couple of very salient points even if you do not draw the same conclusion that he does. Chances are some reading this will draw the same conclusions that Paul does.
In with the vitriolic commentary are a couple of things that I think are worth keeping in mind. I agree that Wall Street is not your friend. I'm not sure trying to steal from you is correct but my couple of stints at brokerage firms lead me to believe that there is not proper regard for clients by the firms (the brokers are a different story). He may end up being right about the US market being down 20% again for the decade. I happen to disagree with the number but I felt the US was a less attractive investment going back quite a few years now and believe that to be the case going forward.
I don't really understand, based on the article, we he doesn't assign some portion of the cause for the last decade's poor returns to an economy having had rotten fundamentals.
The money quote from the article;
Statistically, the odds now predict Wall Street losing another 20% of your money in the next decade. The momentum's headed down. So, what should you do? Sell all your stocks, ETFs, bonds and funds. Get out of commodities and gold. Sell.
He really drives home his belief about the new decade being down 20% and that it will be Wall Street's fault. On page two he gives eight reasons why and while most of the eight reasons are legitimate risk factors I do not follow why the risk factors work out to 20% as opposed to more than 20% or less than 20%.
The first thing I thought of as I was reading the article was yes, whatever the reason, the S&P 500 was down 24% for the decade but plenty of other places were not. The countries I have talked most about since starting the blog in 2004; Ireland down 43%, UK down 23%, Switzerland down 15%, New Zealand down 5%, Spain up 2%, Singapore up 9%, Canada up 39%, Australia up 51%, Israel up 109%, Norway up 121%, China up 136%, Chile up 194% and Brazil 301%. I have not been in Ireland, New Zealand or Spain for quite a while now and reduced UK exposure meaningfully in 2007.
New Zealand (again I've had clients out for years now) and Chile might be a little off the beaten path but I've been writing about them the whole time. I would say that most of them are very easy to access with ETFs or NYSE listed stocks and if I found them they were not some sort of secret. That many are covered by ETFs and the ETFs captured the effect (even if there were any tracking error issues) even while Wall Street was stealing from you means, IMO, that success can be had in a "rigged game" even if "the house" is stealing from you.
I think it could be argued that ETFs and NYSE listed ADRs are part of wall street yet they went up (those that did) because in the case of the ETFs the things they track went up and in the case of ADRs they were part of markets that were on firmer footing with better fundamentals and they went up; Statoil (STO) and Vale (VALE) as examples of stocks I own that I have probably talked about more than any other holdings.
You may or may not be comfortable picking country ETFs or buying relative mega cap stocks from other countries but if Farrell is right about the US, even if it is for the wrong reason, as I have said previously there will be countries that thrive in the new decade offering normal or better than normal returns.
If you want to look for these countries I would suggest looking for countries with better stats (GDP, debt and so on), countries that have stuff that other countries have to have and countries I have previously labeled as in their own world which I view as countries where the population is large, young, eager to work cheaply (cheap by US standards), where life is clearly going to improve which all results in these countries becoming more important in the world economic order.
I am not too interested in Farrell's conclusions but there is utility in some of things he looked at to come to his conclusion.
The picture was taken by a buddy I used to work with when he was in Iraq. I heard yesterday that after being home for a while he is headed to Afghanistan. If you have a moment maybe you can send a good thought his way.