Freedom Investing Since 2000

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We have been writing about Freedom Investing over a decade now.

Recently we did an analysis of the returns of the MSCI Country Specific Indexes along with the MSCI EAFE Foreign Index and the S&P 500 Index from 2000 through June 30th, 2014. These years include the correction starting in 2000.  Here is a summary of the results:

Freedom Annualized 2000-201406
We’ve color coded the countries with the most economic freedom in blue (Hong Kong, Singapore, Australia, Switzerland, New Zealand, and Canada). We’ve color coded a second tier of mostly free countries of northern Europe in sea green (Austria, Sweden, Germany and the Netherlands). And we’ve colored the MSCI EAFE Index in dark yellow along with the S&P 500. All the returns are in US dollars and include the gross reinvestment of dividends. (Every index has several different versions that can be used and they should all be the same version for comparison.)

It is helpful to view each year’s returns to see how the countries which are higher in economic freedom compare with the EAFE and S&P 500 Indexes. Here is 2000 through 2004:

Freedom Investing 2000-2004

Here are the returns from 2005 through 2009:

Freedom Investing 2005 - 2009

Here are the returns from 2010 through  June 30th, 2014:

Freedom Investing 2010 - 2014-06

As you can see, the S&P 500 did well comparatively in 2011 and 2013.

Because of recency bias, many investors are convinced that the United States is the “place to be.” But as you can see, the S&P 500 returns have not been particularly stellar in the even years.

Finally, here is the entire series in a single image. The color coding helps to see the trend. Click on the image to see the full version:

Freedom Investing 2000- - 2014-06

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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818...)