More on Why Former Market Leaders No Longer Lead
I mentioned last month that Old Stars Don’t Lead New Bulls; In light of the recent bloodletting on the Nasdaq, I brought this up on Kudlow & Co. Wednesday evening.
Some people (mostly emailers unable to spell) refuse to believe this. One had the temeritiy to demand some proof.
By coincidence, I just happen to have some. I'm doing a new column on this for RM, and I have been working with the nice folks at the Wilshire Associates. They culled this together from their extensive database. Its a comparison between the market performers from the 10 year period of the 1990s (December 31, 1989 through Decmber 31,1999). We then compared that with the recent period from the 2002 lows (Septmber 30, 2002 through June 21, 2006). The only requirement was a Market cap of > 1billion (as of the ending date).
Here's the top 20; If anyone is interested, I can upload the full spreadsheet of the top 50, along with a look at market caps.
>
click for larger graphic
Note how different the sectors are in the groups representing the leadership for each era . . .
Friday, July 14, 2006 | 05:51 AM | Permalink
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Tracked on Jul 23, 2006 1:51:36 AM
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Quick and Dirty (left out the returns listed NA). The top performers of the previous decade averaged an 87% return since Sept. 02, while the S&P returned 51% and the NASDAQ returned 88%. It appears last decades top performers outperformed / equaled the recent bull.
Posted by: Jake | Jul 14, 2006 7:47:06 AM
temeritiy? culled this together? its?
better be careful how you label bad emailers big guy.
Nobody's perfect.
LOL and this is gentle ribbing not an attack.
Enough of those in the world these days.
BR Damn! I forgot to use the sarcasm code! -- Its true, its hard to read saracasm in print sometimes.
/-snark//
Posted by: Ned | Jul 14, 2006 8:44:57 AM
to think that we get led by a soft drink /juice maker ...... no wonder we're in a BEAR market
Posted by: Dave2 | Jul 14, 2006 8:47:50 AM
i guess there's life for some fallen dot.com angels --- GLW , AKAM ...... who knew
Posted by: alanG | Jul 14, 2006 8:50:05 AM
Looks like BR called it! In "Housing Leads the Economy Up and Down", BR laid out the case a falling housing market precedes a decline in consumer spending. And with the numbers released this morning for June, consumer spending is falling. Good call, BR.
http://bigpicture.typepad.com/comments/2006/06/housing_leads_t.html
Posted by: Chief Tomahawk | Jul 14, 2006 9:04:33 AM
New market leaders until they are no longer leaders. Mark my word, I will be eating, not drinking, Hansen for lunch. I am waiting for my short entry and going to ride this sugar water maker to its demise.
I've seen this story time and time and time and time again. Snapple, Cott, Clearly Canadian and on and on and on. Huge runs only to become delisted or penny stocks or be purchased. In fact, the last option is their only hope. The big boys and girls in this space have legions of chemists and super savvy marketeers to slap a label on a new type of sugar water and push these guys on shelf space and revenue until they start missing their quarterly numbers. The moat is an inch deep. A mojo play that was 50 cents a few years ago. The only question is if there will be enough shares for me to ride this pig down hard. This is a sure thing if I ever saw one.
Posted by: BDG123 | Jul 14, 2006 10:08:59 AM
Damn! I forgot to use the sarcasm code! --
Its true, its hard to read saracasm in print sometimes.
/-snark/ mode is now off
Posted by: Barry Ritholtz | Jul 14, 2006 10:23:55 AM
I'm wondering if the big cap techs (chips and telecoms) the bulls have been pumping for a comeback may actually become the leaders again in the next bull.
Back in 2000 when the techs were leading we got a parade of guys who said the small caps would take over the leadership. They were right, but it took a bear market and three years for them to be proven right!
We'll know when we see the new leader board, I guess.
Posted by: Craig H | Jul 14, 2006 10:40:39 AM
BDG123
tell us when you short HANS .... want to go along for that ride to the bottom
Posted by: GcL | Jul 14, 2006 11:13:26 AM
TIMBERRRRRRRRRR!!!!
If a market falls in the woods, and no permabull pumpers spout off on CNBC, does is make a sound?
Posted by: Alaskan Pete | Jul 14, 2006 11:15:23 AM
• 75% of Market Leaders in each cycle were new companies that incorporated in prior then years, 80% paid no dividends, and earning growth was the driver of market leaders, not dividends.
Posted by: Larry Nusbaum, Scottsdale | Jul 14, 2006 11:15:55 AM
How about WFMI and CMG? Those are this market's Boston Chickens.
Have some tacos and bean sprouts with your soda.
Posted by: Craig H | Jul 14, 2006 11:17:51 AM
BTW: Looks like the greatest winner from the 1980's/1990s is missing: UNH
Posted by: Larry Nusbaum, Scottsdale | Jul 14, 2006 11:18:03 AM
Looks like small caps finally break the trend line... long way down. Will they follow the pattern of the homebuilders?
Posted by: Bob A | Jul 14, 2006 11:37:46 AM
I thought I would post some silliness from the past. I remember in the early 90s the hot new beverage in the supermarkets were Clearly Canadian. The stock was a screamer. In fact, during its mojo days, I rode the pig for a while. Today, CC is listed on the bulletin board. But, look. The volume since mid 2005 has exploded. People are enamored with Jones Soda, Hansen and.......that brought the retards back into Clearly Canadian in a big way. If this isn't froth, I don't know what is.
http://tinyurl.com/h6kfv
Posted by: BDG123 | Jul 14, 2006 11:48:05 AM
ameritrade crashed about an hour ago and still seems to be down. when i called in to place my order through a broker they said they could not transfer me w/o my acct # and they could not look up my account # from my user name because there systems crashed as well. do i have any legal action with this if the mkt moves against my account?
Posted by: Jake | Jul 14, 2006 11:49:08 AM
ask the investors at Refco. their money was tied up for months.
Posted by: BDG123 | Jul 14, 2006 11:51:38 AM
refco went bankrupt. not quite the same situation bdg123
Posted by: Jake | Jul 14, 2006 11:57:00 AM
its not from a business standpoint. but, you were asking from a legal recourse standpoint. if refco clients couldn't get at their money for months and they went bankrupt, wouldn't you think they would have some legal options? but, yet, they didn't. my point is you likely have little recourse. the only thing that happened was an outage. you signed statements when you opened your account and as much as ameritrade has problems, i'm sure there was a cya in there.
Posted by: BDG123 | Jul 14, 2006 12:06:24 PM
must be fun being a retail broker/money manager this week !!!! yikes ---- I'm looking for another 500 points on DJIA next week , gets to interesting FIB confluence
Posted by: Flm | Jul 14, 2006 12:26:14 PM
THE NIGHT BEFORE WHACKMAS (with apologies to Clement Clarke Moore)
Twas the night before whackage and all through the house, not a permabull was sleeping, ignorant louses.
The bulls were all long, and hardly aware, that lurking in wait was the big bad bear.
The rubes were all nestled, snug in their beds, while visions of the IPOs danced in their heads.
And portfolios with Google, and Cody's large caps
were just settling down for the proverbial dirt nap.
When out on the floor arose such a clatter, the permabull pundits said "PEs don't matter".
Away to the bloomberg I flew in a flash, and loaded up my charts, happy to be in cash.
With CNBC did my HDTV glow ,Gave the lustre of mid-day to objects below.
When what to my wondering eyes should appear, but a pumper clown, and his 8 bull seers.
With a little old shill, so full of shit, I wondered for a moment "who is this dick?"
More rapid than eagles his coursers they came, and Kudlow ranted and raved and called themy by name.
On Cramer, on Laffer, on Ronald, on dipshits. The market is leaking and the pump needs fixin.
Posted by: Alaskan Pete | Jul 14, 2006 12:39:54 PM
Looks to me like we hit bottom about two hours ago. At least for this week. All the traders gone home - me too.
I made a bit on HANS today (long side) - it printed a "buy me" formation about 11:30 or so. Got a buck and change and out. Made my week - thanks shorts - let's do it again sometime.
I try not to predict because I suck at it but the market has gone from overbought to seriously oversold this week and I wouldn't be surprised to see a bit of a recovery next. But maybe not - what do I know - nada - just like the rest of ya.
Have a good weekend - everyone
Posted by: john | Jul 14, 2006 1:50:21 PM
Thanks Pete. Not one I can read to my kids, until they are much much older.
Posted by: Ned | Jul 14, 2006 2:03:42 PM
John 1:50
good thing you don't predict .... cause you don't know ...
"nada" as you said ....... chimp
Posted by: wbl | Jul 14, 2006 2:47:40 PM
Any online account holder should have multiple ways of getting an execution -- (add schwab and etrade) as well as including a reliable offline BD . . .
Posted by: Barry Ritholtz | Jul 14, 2006 3:11:18 PM
