WFCNP - Tech Bubble? The Lost Decade Winners: Energy Financials And Waste
2024-03-21 10:50:33 ET
Summary
- The "lost decade" is a period from 2000-2010 where the S&P 500 returned virtually nothing.
- Many question whether we are in the middle innings of 1995-97 or near the end of a bull run like 1999.
- Healthcare, Energy, Financials and non-cyclical names showed total return outperformance.
- This article discusses 6 stocks that beat the market handily during the lost decade that could be used as a hedge should you be worried about a tech-bubble cliff.
Thesis
Many pundits are questioning where we're at in the cycle of evaluating whether stocks are expensive or not. The "it's different this time" notion always pops up when the market starts trading at stretched multiples exceeding the long-term average.
Disregarding the Schiller "CAPE" ratio and just observing the plain old vanilla P/E ratio by year, we currently sit at around 24 X TTM and 21 X Forward. Looking back further, 24 X is around 1997 levels if we're trying to compare this to the run-up before the lost decade of 2000-2010 ensued. For those not familiar with the term, it's the decade where the S&P 500 returned virtually nothing depending on where you bought it using an index fund....
Tech Bubble? The Lost Decade Winners: Energy, Financials And Waste