Stocks that did well 2000-12 (when S&P500 was flat)

[thowed]

There's a near generation who've worked since 2009 & are used to 'stocks only going up'.

 

But older people (or people who know their history) know that the S&P topped in 2000 and didn't make a new high until 2012 (apart from  maybe a moment in 2007).  So 12-year returns were FLAT excluding Dividends.

 

And this perhaps belies the increasing feeling that most people should index.

 

So IF this were to happen again (e.g. if things got really crazy with Crypto etc. again in the next 12/24m), I was trying to think what stocks did well in that period, as I wasn't paying much attention then.

 

Of course, one of the main problems is that so many successful companies in 2024 didn't exist/weren't listed in 2000.  Forget all the Tech (Alphabet/Facebook) but even V/MA.  But I thought it might be a useful exercise to imagine.

 

You can also slightly divide them in two i.e. those that followed the index in 2000-09, and then shot up after 2009, and the ones that sailed through 2000-03.

 

Here are some I've come up with so far, but any others much appreciated.

 

Unsurprisingly, Berkshire sailed through this period, returning c.100%

Financials; also unsurprisingly generally did so well in 2000-08, that even with their massive crash in 08-09, followed by the bail-out meant they did pretty well.  For instance Ratings: SPGI, MCO, and good insurance.

Healthcare: haven't looked in detail, but classic quality like NOVO, TMO did very well.

Consumer: So these are interesting, as they'd suffered in the late 90s against tech, and then came really good, at least partly helped by reducing interest rates.  Could this happen again?

Property: I guess this is like Financials i.e. did so well to '08, then got bailed out.

 

Incidentally Tech: interesting to see MSFT vs CISCO vs AMZN.

MSFT: pretty much followed the S&P so flat over 12 years.

CISCO: tanked 75% in 2000-01, and barely recovered in next decade, down c.60% over 12 years.

AMZN: insanely volatile, particuarly in the 2000-01 downturn, and 2007-08, then went up 400% from the 08 bottom to 2012!

 

Anyway, they say that history rhymes, and while things feel slightly different now (e.g. MAG6 are insanely profitable oligopolists), one can imagine a period where companies building AI infrastructure get valued in the same way that companies building Internet infrastructure once were (or going further back, Railway infrastructure...).

 

I know that this is a big generalisation, but hopefully just is good for some general thinking.

 

[james22]

Small Value, International

[Milu]

I wouldn't say there is any uniqueness to which companies will do well/badly when markets are flat. I also think defining 2000-2012 period as flat isn't the best framing. It was a period where we had two of the largest stock market crashes in history, along with some pretty good run-ups after.

 

Without looking at the data I would expect that the companies that did well were solid companies from all sectors who consistently grew their earnings, and weren't trading at ridiculous prices (35+ P/E) in 2000. 

[Jaygo]

Great topic. I think to try and compare any time frame and extrapolate from it is unwise. 

 

The era of 2000-2012 had the tech bubble burst so stocks were damn high to begin with. Then 9/11 and the invasion of Iraq of which hopefully will never be repeated. 

 

And to layer it all on with the rise of China and its insatiable appetite for any commodity the obvious results were counties like Canada, Australia and EM doing well as the US sank and spent all its money invading other countries then propping up its companies during the 07-09

 

I remember well in late 2009 sitting in a giant hot tub in Whistler talking with a group of people. Several from Scandinavia, a few Aussies, one guy from the east and 6 or 7 Americans who were really smart and top of things. We all agreed that the world now belonged to Canada and China and the US was entering a downward spiral.

 

Everyone was sure and everyone was wrong. Canada had this big swinging dick feeling in 2010, we held the G20, we held the Olympics and were kicking ass. Our Banks were rocking and some countries even considered using our currency, the beaver!, oops sorry the loonie. I think we even came close to empire building with a purchase of Turks and Caicos. 

 

Well it has been a slow, slippery slide down from basically that point. Our market has sucked, our banks look like shit, EM blew up, China looks like shit and its equities have fared even worse. We now have a dufus masquerading as prime minister and our status on the world stage is somewhere between flaming pile of Shit and rotten banana Republic.

 

Is America about to go through the same thing? Who knows, probably nobody. I could see a great reckoning for America just as easily as I could see a great rebirth. I'm not overly hopeful but i'm humbled by usually being wrong when i'm sure of something.

 

 

 

[Vish_ram]

If I had a penny for everytime someone predicted a downfall for US, I would be a multi-millionaire. 

 

Most people lack imagination on understanding as to why US is great. US has its flaws and chickens haven't come home to roost for fiscal deficit crisis. Even when this crisis erupts, you may have runaway inflation for a decade and then they'll fix stuff and move on.

 

Still capital and people flow to this country. Now they are the unmatched world superpower. They lead the world in technology, biotech & numerous other fields. 

 

I remember attending the 2006 annual berkie meeting and everyone carried a book "Collapse of the dollar". Well, nothing happened.

 

One thing is clear, there is a huge cottage industry that makes money selling the gloom/doom prediction. You can bet your last $ that this industry will thrive no matter what (the Granthams/Hussmans et al). 

 

Most of political stuff that media overplays is just noise. The cultural issues are just fluff. The divisions we see are just superficial in economic terms. The MSM knows how to make $ off of it. 

Edited April 5 by Vish_ram

[rohitc99]

4 minutes ago, Vish_ram said:

If I had a penny for everytime someone predicted a downfall for US, I would be a multi-millionaire. 

 

Most people lack imagination on understanding as to why US is great. US has its flaws and chickens haven't come home to roost for fiscal deficit crisis. Even when this crisis erupts, you may have runaway inflation for a decade and then they'll fix stuff and move on.

 

Still capital and people flow to this country. Now they are the unmatched world superpower. They lead the world in technology, biotech & numerous other fields. 

 

I remember attending the 2006 annual berkie meeting and everyone carried a book "Collapse of the dollar". Well, nothing happened.

 

One thing is clear, there is a huge cottage industry that makes money selling the gloom/doom prediction. You can bet your last $ that this industry will thrive no matter what (the Granthams/Hussmans et al). 

 

Most of political stuff that media overplays is just noise. The cultural issues are just fluff. The divisions we see are just superficial in economic terms. The MSM knows how to make $ off of it. 

+1 The US is bad, but wait till you see other countries  the last time i checked there are very few countries where people are lining up to get in

 

The reason for my optimism is that any craziness in the US tends to get corrected over time due to its system. In a lot of other countries, somehow that doesnt happen

[brobro777]

MO did CAGR 21%+ from Jan 2000 to Dec 2012 I think, div reinvested

 

[thowed]

@Vish_ram I think you misunderstand - I'm not predicting a downfall for US.  I'm just saying that there was a 12-year period where the S&P500 was at the same level at the start and end, and so this 'could' happen again.  And if it did, what might companies/sectors do better than the index? 

 

I find it interesting, because so few mutual funds have been able to beat the S&P500 in the past 15 years, so would that also be the case in the previous 15 years, and how would one overcome that.

 

It's about trying to do research for different outcomes, just in case.  I am agnostic.

 

The US market feels hard to beat right now, as @rohitc99 says.  I was just thinking about how many big Tech/TMT cos there were in Europe in 1999 (Nokia, Ericsson, Vodafone etc.) and how now ASML feels like an outlier.  Amazing how that's happened in just 25 years.

 

I think Asia did fantastically in 2000-12, though I suspect that was at least partly because you were starting from the aftermath of the Asian Financial Crisis, so prices were pretty low.  And things have pretty much stalled there since 2013, apart from I think India and Vietnam.  China obviously has been boom & bust.

 

Incidentally, I found some old Fund Commentaries from 2010-12 earlier while having a clear-out, and reading them felt like reading something from a different century.  It would be hard to begin to imagine what things are like back then.  So this reminded me that 2036 will probably be nothing like we can imagine now. 

 

But I hope that one thing that won't change is that a basket of good quality companies bought at reasonable prices will still perform OK.

 

[james22]

There is a great deal of ruin in a nation, sure, but a "great stagnation" seems possible.

[Vish_ram]

@thowed sorry my post wasn't directed at you. It was a general comment.

 

I've several intelligent friends who get carried away by the "dollar collapse", "US in decline" crap and make sub-optimal portfolio allocation decisions. 

 

Next theme is, "Markets have gone up too much, it has to drop". I know many who were in cash last several years and missed all the upside. What most don't understand is, with monetary inflation running between 8-10%, the stocks are poised to absorb that and go up. Why should markets drop precipitously when you've positive GDP growth, net immigration, productivity and dropping inflation?

 

Last but not the least - Stagnation/lost decade etc. Many countries experience this. So it is natural to apply this theme to US. Where is it now? 

 

The US politicians may appear to be like doddering old fools who bicker always. Look at their actions to bring back manufacturing, bank regulations, energy independence etc. 

 

[Spekulatius]

2 hours ago, brobro777 said:

MO did CAGR 21%+ from Jan 2000 to Dec 2012 I think, div reinvested

 

And has badly underperformed since 2016. No guarantees.

 

The period from 1998 to 2112 was an interesting one as different sources boomed and busted at different times. 2000-2002 was foremost a tech crash but utilized got hit badly too (Enron etc). 2008-2009 was a financial crash where pretty much everything crashed, but tech recovered well, while banks never got their multiples back from before and many bank stocks were diluted at the bottom (Citigroup), so they could not recover.

[Pelagic]

Iron ore miners. Take a look at CLF's chart from 2000-08 for instance, even post GFC into '12 you'd have been quite happy to have bought in the early 2000s and sold then. This is back before it became primarily a steel producer. A lot of this was of course due to the explosion in Chinese demand during that time period. Even the big players like BHP and VALE haven't gotten back to their highs during that period.

[Jaygo]

8 hours ago, thowed said:

@Vish_ram I think you misunderstand - I'm not predicting a downfall for US.  I'm just saying that there was a 12-year period where the S&P500 was at the same level at the start and end, and so this 'could' happen again.  And if it did, what might companies/sectors do better than the index? 

 

I think I am the one who mentioned a downfall of the US but am in no way predicting that and dont want to steer the conversation that way either. Its too promising a subject to go all doomer macro on.

 

Its a great topic but fraught with unpredictables. If your looking to skate to where the puck is going I think you have to envision massive productivity gains in some things and status quo in others. What those will be will likely to be the deciding factor in equity performance.

 

Can we take oil for example. Everything about energy and oil screams boom, we use more of it, need more of it and simply put our economy IS energy consumed.

If i pay a guy 5000 to build me a fence the money is not gone, he has it. The trees are gone but they are self replicating. The only thing that disappears is energy and time, his physical and the embedded energy in all parts of the project (screws, wood, driving to HD ect)

To me the only thing in the world that matters is energy but it has been a graveyard for capital for a long time. Why? because of technology. If it wasn't for tech in drilling, oil could be 600 bucks a barrel easily and we would pay it because there is no alternative. 

 

So oil could be where the puck is going if we dont have any more big breakthroughs. I think oil is a status quo that will struggle to find another shale revolution and will be upside heavy over the next 20 years. You could probably put anything hard to do in this pile.

 

Anything related to aging is probably a decent bet too. What the hell do 65 year olds do?, what do they need, what do they desire. 

 

Retail Apocalypse Now Redux!

I think Amazon is going to consume the bulk of retail and may be the only company to ever really deliver trillions to its owners.  It just does not make sense to shop elsewhere for most items. Costco avocados rock but Bezos brings me my Bubbly! Its every facet of retail that amazon will grind to dust inmo. I'm currently fixing up a truck that was left to me by may late father. I'm willing to shop everywhere and have been reading forums on diesels and interior restoration. I take delivery on everything from amazon. They have it, they have options, and it shows up withing 36 hours. I bought oem filters, oil pans, gaskets, fuel filters, fuel lines, seat covers, apple car play dash, rear view mirror, marker lights, ford spec spray paint, PB blaster and oils, Sanding disks and body work stuff, wires and fuses. Literally everything except for two giant batteries. 5k easily so far. AutoZone didn't get that spend, Canadian Tire didn't get that spend either. 

 

Youtube. Traditional education is dead without knowing it. Youtube is essentially how knowledge has been passed on for thousands of years. If big ED wants to be about babysitting our youth and networking that's fine but I'll stick to Youtube to actually learn. The human growth and productivity that will come out of this format alone is likely going to rival the advances seen with Gutenberg's press.

 

Those would be my picks, Energy, aging, the death of retail at the hands of Amazon and the rapid growth of decentralized knowledge. Lot of winners and losers to dig through.

 

 

 

[KCLarkin]

8 hours ago, thowed said:

But I hope that one thing that won't change is that a basket of good quality companies bought at reasonable prices will still perform OK.

 

 

These stocks did perform well 2000-2012. I looked at a few boring "compounders". The few stocks I looked at all did good to very good during this period (though this is hindsight because these are famous compounders in part because they performed well during this period):

 

Copart

Fastenal

Autonation

O'Reilly

Tractor Supply

Alimentation Couche-Tard

Boyd Group

Heico

 

Most of those have also done well in the 2012-2024 period, I think. And some newer flavours (e.g. Constellation Software and Transdigm) have done exceptional as well. So it is tempting to assume great compounders are "evergreen". But Mr. Market has bid many of these up, so who knows.

 

But if you can buy these types of companies at reasonable prices, you can generally ignore what the indexes do.

 

 

[scorpioncapital]

My view is you have to accumulate sufficient unrealized gains that if it turns flat for a while you can just wait it out and/or get some dividends too. While buybacks are theoretically similar, dividends seem better to me in a flat period. Also there are now new taxes on buybacks which I am not sure if the equation tilts in favor of dividends.

[mattee2264]

Stagnation is the Japan scenario. It isn't going to happen to the USA which continues to have the most dynamic and innovative businesses. You need declining multiples AND earnings over a long period of time. So long as the medium to long term trend of USA corporate earnings is upwards (albeit with cyclicality) stagnation will be avoided. 

 

A sideways market is more benign and results from a combination of multiple compression and earnings failing to grow enough over the period of measurement to offset this. 

 

The Shiller CAPE is around 35. But for much of this century the CAPE has been in the 20-30 range. And since 2015 it has spent most of the time in the 25-35 range and that is even with two bear markets. So I think bears overestimate the potential for multiple compression. 

 

So multiple compression is a necessary but historically not a sufficient condition (unless you are comparing market levels at bull market peaks and bear market troughs). 

 

What you also usually need is for earnings to go on a long and interesting ride to nowhere over a long period of time. For that to happen you need major recessions that take years to recover from. And again the bear markets have been wrong in their prediction for a hard landing. 

 

Of course you do not need a major economic recession. 2000-2002 was a good example. The economic recession was mild. But the corporate profits recession was severe because it turned out that dot com earnings weren't sustainable because they reflected the peak of a boom and bust investment cycle and a fair degree of creative/fraudulent accounting which got cracked down on after all the scandals. But difficult to see that analogy playing out either. Difference this time is that the mature Big Tech companies (ignoring Nvidia/Tesla etc) have their earnings power backed by free cash flow and very strong moats. And even if AI doesn't provide much benefit to their earnings just from their core businesses they should do just fine. And if we avoid a major economic recession then the rest of the market should do just fine as well as their valuations are about average and their earnings will grow in line with nominal GDP growth over long periods. 

 

 

Edited April 7 by mattee2264

[Spekulatius]

You can get lousy index performance when a few stocks start to dominate the index and those stocks start to perform badly. On this case, the average stock in the market may do quite well, but the market cap weighted index would underperform an equal weighted index. A classical example is Canada where Nortel became close to half the index at its peak and then subsequently went to zero. It caused a severe underperformance of the Canadian stock market for quite some time.

Another example is the UK stock market with its heavy weighting of financials which imploded during the GFC and did not perform that well years later.

[Blake Hampton]

On 4/5/2024 at 9:39 AM, Vish_ram said:

If I had a penny for everytime someone predicted a downfall for US, I would be a multi-millionaire. 

 

Most people lack imagination on understanding as to why US is great. US has its flaws and chickens haven't come home to roost for fiscal deficit crisis. Even when this crisis erupts, you may have runaway inflation for a decade and then they'll fix stuff and move on.

 

Still capital and people flow to this country. Now they are the unmatched world superpower. They lead the world in technology, biotech & numerous other fields. 

 

I remember attending the 2006 annual berkie meeting and everyone carried a book "Collapse of the dollar". Well, nothing happened.

 

One thing is clear, there is a huge cottage industry that makes money selling the gloom/doom prediction. You can bet your last $ that this industry will thrive no matter what (the Granthams/Hussmans et al). 

 

Most of political stuff that media overplays is just noise. The cultural issues are just fluff. The divisions we see are just superficial in economic terms. The MSM knows how to make $ off of it. 

I feel like this describes things perfectly

[frommi]

Talking my book here, so Tobacco, REIT's or discounted NCAV stocks. 

Everything in the oil sector like OXY, gold miners (or even better royalty companies like RGLD,SAND) etc. But if we get a recession in 1-2 years, i doubt you will make a lot of money on these until after the recession.

 

I would really love to see a repeat of 00-08, but i doubt we will see it. Because back than china was building their ghost cities, which will probably not be repeated and they consumed a lot of the worlds resources for that. (iron ore etc.)

Edited May 21 by frommi

[mattee2264]

The resources super-cycle thesis is now greening and the economy and AI. That could turn out even better than the China super cycle. Although there will probably be a better long term buying opportunity as the global economy slows down over the coming year.

 

Emerging markets seem worth a look. And you can even do it ex-China. 

 

Malkiel and Ellis did a good analysis of the lost decade for the S&P 500. They found a diversified portfolio which included EAFE, EM, small cap did just fine. I suspect the same might be true given the S&P 500's incredible outperformance over the last decade. Ex-USA most valuations are pretty much in line with historical averages and even if AI lives up to all the hype then the resulting productivity improvements will mean faster growth and higher margins for ex-USA companies. But in the USA margins are already way above the historical average so any AI related benefits to margins could well be offset by higher taxes, more regulation, higher interest rates etc. 

 

And if AI flops then high flying USA tech companies have the furthest to fall. 

Edited June 14 by mattee2264