Posted by: donmihaihai | December 4, 2009

Contraian

Off the Charts

From Leader to Laggard in Just over a Decade

By FLOYD NORRIS
Published: November 20, 2009

THE American stock market has soared 64 percent since it hit bottom eight months ago.

And that leaves it just where it was more than 11 years ago.

The United States stock market was the world leader in the great bull market of the late 1990s, but more recently it has been a laggard, in large part because of the weakness of the dollar. As the accompanying charts show, a stock investor looking for a part of the world to invest in back in 1998 — and to hold onto until now — could not have done worse than to choose the United States.

The charts show the movement of the Standard &Poor’s 500 and the S.& P. International 700 in the period since the American index first reached 1,100 on March 24, 1998. The International 700, which encompasses the non-American stocks in the S.& P. Global 1,200, rose much faster in the middle of this decade, then fell faster in the global recession. But since prices bottomed, it has leaped more than 80 percent.

For the entire period, an investor was better off in emerging markets than in the developed world. The segments of the global index representing Latin America, Australia and emerging Asian countries have soared. The Canadian index also more than doubled, thanks largely to natural resources stocks.

But prices, as measured in local currencies, are lower now than in 1998 for both the S.& P. Europe 350 and the S.& P./Topix 150, covering Japan. Measured in American dollars, as shown in the charts, those markets posted gains of 20 percent and 7 percent, respectively, because of currency movements.

On a sector basis, the best place to be over that period, both in the United States and globally, was in energy stocks. Oil prices fell to just above $10 a barrel in late 1998, and few investors saw value in the area. More recently, oil company profits set records as crude soared well above $100 a barrel, and even after the global downturn the price is more than $70.

Financial stocks have suffered more in the United States than in the rest of the world, but the credit crisis brought down many banks in other regions as well.

The charts also show 15 well-known companies from around the globe whose share prices are at least 300 percent higher than they were in 1998, and 15 such companies whose prices are less than half what they were then.

Those lists show that performances can vary wildly within an industry. While British Airways and All Nippon Airways make the losers list, Ryanair of Ireland was a big winner. Fiat and Ford were losers, while Hyundai shares leaped. Makers of communication equipment include Research in Motion, the producer of BlackBerry phones, which is up more than 8,000 percent, and Alcatel-Lucent, which is down almost 90 percent.

Floyd Norris comments on finance and economics in his blog at norris.blogs.nytimes.com.

http://www.nytimes.com/2009/11/21/business/economy/21charts.html?_r=2&ref=business

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Responses

  1. don’t be surprised if it turned into leader the next decade. reversion to the mean.

    energy sector may run of of steam in the next decade.


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