Investing
How Top Tech Giants and Banks Dominated the 10-Year Bull Market
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The bull market is officially 10 years old. That anniversary took place on Saturday, March 9, 2019. The Dow Jones industrial average and S&P 500 had both put in double-digit gains in early 2019, before the most recent selling, but all the major equity indexes have risen exponentially since the V-bottom in 2009 and the day that the current bull market started. When pegging a bottom of the stock market in 2009, it’s important to consider your indexes.
March 9 was the lowest close for the S&P 500 of 676.53, but the big V-bottom intraday low was on Friday, March 6, at 666.79, with a close of 683.38. The Dow had a low close of 6,547.05 on March 9, but the intraday low of 6,469.95 was seen on March 6 with a close of 6,626.94. The most recent index levels were 25,450 for the Dow and 2,743 for the S&P 500. That was up about 290% for the Dow and 310% for the S&P 500.
Where things get interesting is in evaluating the technology-heavy Nasdaq Composite index. The March 9, 2009, close of 1,268.64 was lower than the March 6 close of 1,293.85, and it was barely above the intraday low on March 6 of 1,268.54. These were just under the November 21, 2008, intraday low of 1,295.48 and the November 20, 2008, low close of 1,316.12. This number should just be rounded to 1,300 for simplification. The Nasdaq Composite already had reached 1,700 by the end of April in 2009, but the 7,408 recent level for the Nasdaq was up more than 465% from that V-bottom low. This will become obvious when you see how the largest tech giants have performed over the past decade.
Seeing index gains of 300% or more is not exactly routine. Many investors would be happy for gains of that size to come in a lifetime, let alone a decade. We just have to keep in mind that the S&P 500 pre-recession peak of just over 1,550 in 2007 was not retaken until early 2013. A lot of this bull market was simply playing catch-up.
24/7 Wall St. has provided a review of the top stocks in the market to show just how well some of them have done. These have all outperformed the broader indexes, but some of them have outperformed the indexes exponentially.
Here is a quick look at a handful of the largest companies and most desirable stocks of today have performed since the start of the 10-year old bull market. These certainly are not the only tech and banking leaders that have dominated since the recession, but these are the ones deemed the leaders and with the least amount of operational issues today.
Amazon Up 2,500%
Amazon.com Inc. (NASDAQ: AMZN) had been under $50 during part of January 2009, but the March 9, 2009, closing price was $60.49. Its shares more than doubled to $134.52 by the end of 2009, but that’s nothing compared to the $1,600 in 2019. If you just use the March 9, 2009, level it’s a gain of better 2,560%.
Over that time, Jeff Bezos became the world’s richest man on paper. And in a serious shift in the business model, Amazon acquired Whole Foods in 2017 to increase its offerings and to expand its presence and points where it can reach customers.
Apple Up 1,300%
Apple Inc. (NASDAQ: AAPL) was at a price of $12.19, or actually down at $8.13 on a dividend-adjusted basis, on March 6. Its adjusted closing price of $7.92 was the close on March 9, 2009. Apple shares were then at $15 (unadjusted) by March 24 and back up at $20 (unadjusted) by June 1. An adjusted $12 price at the lows compares to a current price of $172.
Despite the gain in Mac and launches of the iPad and the Apple Watch, Microsoft remains a story about the iPhone. The other key issue for Apple today over 2009 is that Tim Cook is running the company rather than Steve Jobs.
Bank of America Up Over 600%
Bank of America Corp. (NYSE: BAC) was the poster child of saved banks as it had acquired the Nationwide mortgage giant. Its shares closed at $3.75 on March 9, 2009, but had reached almost $7.00 a week later, and it closed at around $15 by the end of 2009. With shares at $28.50 ahead of the 10-year anniversary since the V-bottom, that’s a gain of 660%, without even considering that the bank is back to paying dividends again. Bank of America ran into additional trouble shortly after the end of the recession, but now Warren Buffett and Berkshire Hathaway have a massive stake.
Ken Lewis led Bank of America ahead of and through much of the recession, but Brian Moynihan took over as president and chief executive in 2010.
Google Up Nearly 700%
Alphabet Inc. (NASDAQ: GOOGL) is where Google should be now in the order because that is what it was back in 2009, and Google hadn’t split up its shares yet and endured a name change. The shares also have to be tracked under the GOOG ticker to keep it apples to apples. That closing price was $144.51 on March 9, 2009. By the end of 2009, it was roughly $308, but it was $1,142.00 shortly ahead of the 10-year anniversary. That’s a gain of almost 700%.
Google is now a split company with two classes of stock. Google was almost all about search back then, but the Alphabet of today is a behemoth with Android, YouTube, Waymo and too many other underlying efforts to easily count.
JPMorgan Up 500%
JPMorgan Chase & Co. (NYSE: JPM), which was forced to take bailout money but insists to this day it would have survived regardless, was at $15.90 on the March 9, 2009, close, but being a bank it was up at $20.00 just two days later, and the banking giant’s stock closed out 2009 at $41.67, without considering the $8.00 or so in dividends since then. With its shares at $103.00 heading into the 10-year anniversary, it’s a gain of about 550%, even before considering the dividends.
Jamie Dimon is still in charge of JPMorgan today, and shareholders likely wish he could reign as board chair and chief executive for another 100 years.
Microsoft Up Nine-Fold
Microsoft Corp. (NASDAQ: MSFT) was at a price of $15.28, or actually down at $11.96 on a dividend-adjusted basis on March 6, 2009. Its adjusted closing price of $11.85 was the close on March 9, 2009. Microsoft’s stock price was back up at $18 (unadjusted) by March 23 and had hit $21 by April 30. Using an adjusted $12 price at the lows compares to a current price of $110.
The Microsoft of 2019 is way different than in 2009, with Satya Nadella evolving the company beyond what was started by Bill Gates and continued by Steve Ballmer. The Windows and Office suites are now effectively operated as a software as a service model. and the company is one of the few firms dominating the cloud.
24/7 Wall St.Netflix Up 62 Times the Bottom!
Netflix Inc. (NASDAQ: NFLX) is still the darling of the stock market to cord-cutters and investors alike. A decade later, Netflix still pays no dividend. Yet, its shares closed at $5.50 on March 9, 2009, and had recovered to $7 by April 13, 2009. But imagine what owning it then and holding for a decade would look like with close a $345 share price. It’s a gain of better than 62 times your money! What needs to be said about Netflix — other than that some analysts still question how profitable it can be in the future based on how much original content it keeps paying for?
Netflix soon will lose its Walt Disney content and faces more competition for streaming subscription services, both imminently and in the decade ahead.
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