By: Edward J. Leach, CFP®, MBA
You probably think I am talking about 2010 through 2020, right? Nope.
In doing some research, I stumbled upon an article in the LA Times from December 28, 1999.
The headline?
"Decade's Hottest Stocks Reflect Hunger for Anything Tech"
The most amusing part of this article, other than realizing I had just turned 12 when it came out, was the companies named. Change out the names of the "hot" companies from Dell Computers, EMC, and Solectron (deemed the "Symbol of Silicon Valley" by the article) to Apple, Nvidia, and Amazon, and it could have been written last week.
Here are some of the tidbits that may sound familiar to today:
"Just look at Dell Computer Corp.'s decade-leading 91,863% rise, as measured from its closing stock price on the last trading day of 1989 through Thursday.
That means a $5,000 investment in the personal computer maker at the start of the '90s would be worth more than $4.5 million today. You could have become a Dell millionaire by putting in only about a grand."
Imagine reading this and thinking I need to hop on the Dell bandwagon?
We don't know how much $10,000 invested in Dell on December 28, 1999, would be today because the company was taken private in 2013. However, if you put $10,000 in a no-name company at the time like Apple and never sold it, you would have about $2,011,745 today.
The point here is not to poke fun at Dell but instead to remind investors that you are purchasing the company's future earnings when you buy individual stock. Not what they earned in the last 10-years.
" The '90s saw the rise of the individual investor, as average folks started making more of their own investing decisions. Many turned to discount brokerage innovator Charles Schwab Corp. Its stock, in turn, is up 7,343% in the decade."
The "rise of the individual investor" – sounds a lot like what we are seeing today with Robinhood and the gamification of investing.
"But with established full-service rivals such as Merrill Lynch Corp. jumping online, and upstart Web sites such as Ameritrade Corp. offering cheaper trades, Schwab now is under attack on all sides. The stock is down 54% from its 1999 peak.”
Coincidentally enough, Charles Schwab acquired "Ameritrade Corp," now known as TD Ameritrade, in October of 2020. Merrill Lynch, albeit the name still exists today, had to be acquired (saved) by Bank of America during the 2008-2009 financial crisis.
The more things change, the more they seem to stay the same.
Here is a link to the article from the archives of the Los Angeles Times: LA Times Article - December 28, 1999
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Ed Leach, CFP®, MBA is a Partner and Wealth Advisor at HIGHLAND Financial Advisors, LLC in Wayne, NJ and works directly with clients advising them on their financial planning and investments. Ed’s work focuses on the unique needs of business owners, helping them extract value from their business while creating efficiencies in their business and personal financial plans. He is, also, a member of NAPFA which is dedicated to serving fee only advisors.