Time is not always your portfolio’s friend, as in Japan, commodities and the Great Depression ReutersEmployees of a foreign exchange trading company work under monitors displaying Japan's Nikkei stock average and the Japanese yen's exchange rate against the U.S. dollar.My last column looked at the frequency and statistics of market declines and how long it took them to recover. Those statistics make a fairly strong case for investing in the stock market, especially during the kinds of temporary dips we are having now. After all, the numbers are clear — the U.S. stock market has over the long term been a huge winner with average yearly returns of over 10% for the last hundred-plus years. That result is why buy and hold has been such a proven investing strategy. It’s even become a sort of running joke among my investing friends — whenever the market drops and our holdings are red, we jokingly say we’re in it for “the long term” since it’ll eventually be green again. Implicit in that joke however is a very serious assumption — growth is forever and the market will always go up. Without that assumption, the entire basis behind passive buy and hold and to a certain degree stock-market investing itself falls apart. While I firmly believe that the current market selloff is a short-term blip and long-term prospects are still positive, it gave me pause and I figured it was worth a look to examine the worst-case scenario. So in the interest of a more balanced viewpoint, let’s take the opposite side of the argument — is there a chance that a financial market, or financial asset, will see a generational peak (approximately 20 to 30 years) and will not recover for that generation of investors? Doing some research, it’s surprisingly not as rare as people may assume and has happened on several occasions. Here are just a few:Japan Perhaps the best-known failure of the long-term scenario and the scariest for equity investors. The Nikkei index peaked in 1989 at 38,915 during the height of the Japanese economic bubble. Over 25 years later the index now sits at 18,005, still nursing a 54% decline and at one point down 82% during the 2009 crisis. Taking into account inflation, currency, dollar-cost averaging, etc. does nothing to make the scenario better: For that generation of investors, the Japan stock market has been a complete disaster. Nor is it likely to get any better: Stuck in a lost quarter century of no growth and a pending demographic disaster, the Nikkei is a nightmare for long-term investing.Asia financial crisis Though largely forgotten among U.S. retail investors, the Asian financial crisis of 1997-98 was to some countries worse than the 2008 crisis in the US. Almost 20 years later, many countries are still feeling the impact today. As an example, the Malaysian Kuala Lumpur Stock Exchange, at the time the third largest in Asia, dropped 75% from 1,077 to a low of 262. While the index has recovered to 1,650 today, a 53% rise, that gain is more than wiped out by the 75% crisis-driven currency depreciation for foreign investors.South America Similar to the Malaysia story, many countries in South America had strong economies long ago only to turn into failed states. Argentina is one of the best examples. In the early 1900s, Argentina was ranked among the 10 richest in the world, above Germany even, but a century of poor governance, policies, and ineptitude has left it repeatedly bankrupt. Though the Argentina stock exchange has risen almost 3,000% since its 1998 depression, it has also seen enormous inflation and currency depreciation. Though real figures are difficult to pin down, currency depreciation alone resulted in a 10- to 16-times drop in value. And let’s not even talk about Venezuela.Currencies Though a departure from typical investment assets in the U.S., currencies do play a role for many foreign investors and multinationals corporations. Unlike profit-driven stock growth, currencies are tricky since they also measure relative economic strengths between countries. Nonetheless, for those who invest or trade currencies, there are many cases of generational losses (and equivalent generational wins). The British pound traded at 2.8 times the U.S.dollar back in the 1950s — it’s now at 1.5x, a 50% loss over 60 years. The Japanese yen is another example, down to 120 today from a high of 360 from the 1960s.Great Depression Only a memory today, the Great Depression is often pointed to as an example of a long-term buy-and-hold recovery success story. However, the real story for a person living through it is more nuanced. From the Dow peak of 381 in 1929, it took until nearly 1954 to recover, a 25-year period. Adjusting for inflation extends the length by a few years. Though the market did eventually recover, it was a moot point for most of that generation of investors, many of whom would not recover before they retired or died.Commodities For all the talk about gold the last few years, commodities have been a generational long-term loser. Gold spot price, for example, on a non-inflation-adjusted basis, hit a bit over $700 in 1980 and didn’t permanently pass that level until mid-2008, nearly 28 years. Silver is even worse, down 50% today from its 1980 spot price. Wheat is another example, down 33% from its 1995 peak. Taking inflation into account only makes these cases worse.Nasdaq dot-com bubble The infamous dot-com bubble at the turn of the millennium is the most recently memorable addition to the list. Though only 15 years ago, it’s one of the most recent long-lasting crashes. Peaking in early 2000 at over 5,000, the Nasdaq composite has recovered to near parity at 4,750 today. However after adjusting for inflation, the Nasdaq is still down almost 30% since the bubble. Don’t expect pets.com stock to be back anytime soon. So what lessons to draw from this? Well economic and perpetual stock-market growth is not always assured. However, diversification across multiple countries, political systems, types of assets, currency-hedged ETFs and time/cost averaging can really help to minimize most of the risks that caused these examples. Still, despite the common thinking about the long term, there are a surprising number of cases where the long term failed for an investor living in that time period. So while it could be true that the long, long term will work out, as Keynes pointedly said – “in the long run we are all dead.” More from MarketWatch