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The Ugly Decade

While the official start to the next decade isn't until 1/1/2011, the media typically starts and ends its decade coverage when the "9" in the year rolls back to "0".  Over the next few weeks, investors will surely get their fair share of decade coverage, in both looks back at the 2000s and looks forward to the 2010s.

Since 1900, the Dow Jones Industrial Average has declined in price (not total returns) in just two decades -- the 1930s and the 2000s.  The Dow is currently down 9.2% since the end of 1999.  In the 1930s the index fell 39.5%.  The best decade was the 1990s when the index rose 317.6%.


Along with the looks back at the 2000s, we'll also see plenty of stories touting stocks for the next decade in the coming months.  Prognosticating just a year out is hard enough, much less a decade.  Just ask the folks that made their projections for this decade back in 2000. 

Below we highlight the stock picks for the next decade from two articles that came out in early 2000.  The first table below shows the performance of Fortune's "10 Stocks to Last the Decade" that came out in its August 2000 issue.  As shown, just one stock has gone up since then (also the only one to outperform the S&P 500), while two are out of business.

The second table shows the performance of stocks from a New York Times article on February 20, 2000 that asked 10 "top investors" for their top pick for 2010.  These stocks did a little better than Fortune's picks, but not by much.  An equalweighted portfolio of these stocks would actually be up about 30% because of two big winners, but the majority of the "top investors" that participated picked stocks that underperformed significantly.  Click here to read the article.

Investors can and do gain a lot of insight from outlook pieces, etc., but we feel that projecting out a decade is futile at best.  We promise we won't be making any 2020 stock picks here at Bespoke!



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Reader Comments (10)

interesting that most of the picks from '00 are from the technology sector, while the better performers were outside of that realm.

So are the picks today littered w/ banking and basic materials??
December 1, 2009 | Unregistered CommenterPaul Nolte
I think not stocks, markets should be picked carefully. For me stock markets in some North African countries, Vietnam, Brazil and specially Turkey will be the best markets in the next 10-15 years.
December 1, 2009 | Unregistered CommenterHasan Soyer
If you had abided by Kenneth Gilpin's picks and equal weighted your allocations, never rebalancing, you would have made 33% while the S&P lost 18% - I'd say that's not bad. Using the same methodology the New York Times article is much better than Fortune's picks which would be down 44%.
December 1, 2009 | Unregistered CommenterWilson
You wrote:...These stocks did a little better than Fortune's picks, but not by much...

Not by much? Assume you invest $1000 in both portfolios, equally weighted. What would happen?

In first portfolio you'd have $558 or 44% loss, about 19% below benchmark. In second portfolio you'd have $1249 or 25% gain, about 43% above benchmark.

That's the magic of winners form fat tails :)
December 1, 2009 | Unregistered CommenterTrystero
Yeah, you guys need to work on your math skills.
December 1, 2009 | Unregistered CommenterMSG
This is a great example of the problem with individual stock investing with concentrated portfolios. How many people are going to take the "fat tails" all the way to 10 years and ride the portfolio(s)? None, basically.

This is why most investors underperform indices. Look at the average investor experience in the great mutual funds (Heebner's for example). They can't ride out the volatility. Nobody can, really.

Index investing and asset class allocation rules all, along with long term "timing" (buy-sell decisions).

Good luck.
December 2, 2009 | Unregistered Commenterwkevinw
My nominee for the worst stock picker of the decade is some poor sap housing analyst from Goldman Sachs. He was an Asian guy by the name of Kim. During the beginning of the housing bubble collapse in 2007 he was touting the home builder stocks as incredibly undervalued. At the time I figured he was some young kid, fresh out of B school, since the call seemed so idiotic. I wonder what he's doing now? Running a laundry somewhere?
December 2, 2009 | Unregistered CommenterPossumLover
Authros still with publications? If yes, what a bummer....
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