CHAPEL HILL, N.C. (MarketWatch) — Ready for today’s investment pop quiz?

What is the S&P 500’s inflation-adjusted return this century?

If you’re like most investors, your guess will be way too high. Believe it or not, the S&P 500 SPX, -1.11% after inflation has produced just a 0.9% annualized price-only return since its March 24, 2000, top.

How can this be, you might ask, given that we’re experiencing the second strongest and second-longest bull market in U.S. history? The culprits, needless to say, are the two severe bear markets that occurred along the way. The S&P 500 dropped by 49.1% during the 2000-2002 bear market, for example, and an additional 56.8% in the 2007-09 downturn. It takes a lot more than a powerful bull market to overcome them.

One way to appreciate the impact of those two bear markets is to realize that a mere correction would wipe out the S&P’s slight inflation-adjusted gain since March 2000. Just a 12.9% decline would do the trick, in fact.

Why Netflix Doesn't Need Hot Shows to Keep Growing

The NASDAQ Composite COMP, -1.07% is in even worse shape: It would need to gain 12% from current levels just to make it back to where it stood on an inflation-adjusted basis in March 2000.

What can we conclude from these depressing statistics? One school of thought is that, given the modest gains this century, the current bull market should be given the benefit of the doubt. After all, according to this argument, it’s hard to argue that the stock market has gotten ahead of itself if it’s barely positive over a 17+ year period.

John Boyd, one of the editors at the Fidelity Monitor & Insight investment newsletter, is in this camp: “There is ample room for further gains,” he concludes.

Another investment lesson that could also be drawn from this century’s very modest gains is that valuations matter.

Take the so-called Shiller P/E ratio, otherwise known as the Cyclically-Adjusted P/E (CAPE) ratio; it hit its highest level ever at that market top, at 44.2 — nearly triple the average over the prior 120 years of 15.5. In fact, it can be considered as vindication of the CAPE that stocks are only barely higher 17 ½ years after that high reading.

Unfortunately for stocks, the CAPE today is also well above average, even if it is not quite at the nosebleed levels seen in March 2000. Its current reading is 30.4, close to double its historical average. (See recent commentary from Robert Shiller, the Yale finance professor and Nobel Laureate, who is one of the authors of the Shiller PE.)

Must read:The U.S. stock market looks like it did before most of the previous 13 bear markets

The third investment lesson to draw from stocks’ anemic returns this century is that historical averages are just that — averages. Even when the future is like the past, it’s still possible that our specific experiences will deviate significantly from the long-term average. We too often forget that fact when we plan our retirements.

Consider the data compiled by Wharton professor Jeremy Siegel, as presented in his classic “Stocks For The Long Run.” He reported in that book that, even though stocks on average almost always outperform bonds and Treasury bills over the long term, they have not done so in each and every 20-year period over the last two centuries. In fact, he found that stocks lagged bonds in nearly one of every 10 such two-decade periods since 1802, and lagged T bills in about 5% of all 20-year periods.

So this century’s experience may be nothing more than one of those rare events in which stocks are well-below-average performers. If so, what we’ve experienced is hardly worth even mentioning — from a statistical point of view.

But try telling that to the investor who was unlucky enough to invest a lump sum in the stock market in March 2000, or someone who tried to retire then and has long since depleted his retirement assets.

For more information, including descriptions of the Hulbert Sentiment Indices, go to The Hulbert Financial Digest or email mark@hulbertratings.com.