If you lost money in the past several years by investing in the U.S. stock market, you are not alone. Starting with just this past week, stock prices fell, limiting the final gain of the Standard & Poor’s 500 Index. Overall, the "rally" of 2009 did not save investors from a really crappy return on their money for this past decade. 

What were some of the biggest culprits? Ford Motor Co., for starters, lost over 80% of its stock price value once the company declared bankruptcy last year. last year. Shares of JDS Uniphase Corp. 99%, the most of any stock except perhaps for real estate giants Fannie Mae and Freddie Mac. And then there were all kinds of banking and other companies, such as Citigroup, Inc. (91% loss), American International Group, Inc. (98% loss), and the collapse of Lehman Brothers Holdings Inc., Bear Stearns Cos., Enron Corp., and WorldCom Inc.

Even phone and computer companies, which typically do well decade -to-decade, lost out, plunging 64% and 54%, respectively, in the last 10 years. Only Apple Computer, Inc. was the exception to this rule, moving from about $25 in 1999 to about $210 in 2009, and averaging about a 720% return over the decade.

It wasn’t just individual companies vaporizing into thin air that caused such tremendous stock market losses. Two other major plunges occurred: in 2000, the Internet bubble completely popped. Then, in 2008, over $1.7 trillion was lost when global banks  collapsed, leading the S&P 500 to decline by at least 38%. Even with dividends, the S&P was still posting an average decline of 0.9% per year since 1999. This is in surprising contrast to the decade that included the Great Depression, when dividends brought the annualized return on the S&P 500 to a positive 1%.

What did such losses mean to investors who were "being good" and investing  through buy-and-hold strategy? Those who would have invested $10,000 at the close of 1999 would not have about $9,090. In contrast, those investors who would have taken a more negative approach to the stock market, and invested a similar amount in gold futures, would have seen that amount rise to over $37,000 (gold rose ~14%/year). Even 10-year U.S. Treasury notes would’ve resulted in at least $18,000, thanks to their 6.1% annualized return.

There was money to be made in the stock market, however. Short-term investors and day-traders who could predict the volatility of the market stood to benefit from it. Even last week, investors who had placed their bets on Fannie Mae and Freddie Mac would have gained as much as 31% on their  money. However, that gain would quickly have been erased to less than 10% if these same investors had not sold their shares within 48 hours of buying them.

Day trading flies in the face of "sensible" stock investment. Investors have always been encouraged to buy value stocks and hold them for years., if not decades. The U.S. government penalizes investors who sell stocks that have been held for less than one year with a hefty 35% capital gains tax. Dividend stocks have been touted as the way to a secure retirement.

Not anymore.

The past decade has been a lesson to those who thought that buying stocks, no matter at what price, would result in an eventual return on their investment. That does not mean that people should no longer invest in stocks. Rather, investors need to be more savvy in their investment decisions. Analyzing a stock’s volatility, price per earnings ratio, and bottom line are a good start. It will pay not to invest in companies that have significant debt, especially long-term debt. Finally, for those investors who have the stamina, taking a "grab-and-run" approach to sudden stock price increases may be the best idea for maximizing on returns, capital gains tax be damned.