19 Years-The Long Boom
1994 was the last year of the last decade when the market lost money. Even then it was not by much, maybe, 1% after dividends. Still the decade of the 90’s had not gotten off to a great start. On January 1, 1990 the SPX stood at 359.69. 5 years later it was at 459.27- a total 5 year gain of just over 27% or a bit over 5% per year (not including dividends). Not bad but certainly nothing to put up in large banners either.
Yet at this point and unnoticed by most, a quiet revolution in technology was taking place. It had really started in the late 80’s as corporate America began to embrace the computer in a big way. It had found its way into the home as consumer price points on personal computers (PCs) came down and as products like the mouse and Microsoft windows made the machines easier to use. Now the scope of this revolution has been better chronicled by others but I want to throw in one point. In the mid 90’s you could walk into any computer store and see setting there on the shelves whole industries in everything from equipment to gadgets to software that simply had not existed 10 years prior. Almost unnoticed by many a whole new world had arisen and all it needed was one spark for it to really catch on. That spark was first provided by companies that built closed computer networks. AOL comes to mind here*. Later it was dominated by the open framework of the internet.
Wall Street had noticed of course and during the early 90’s technology companies had outperformed the overall market. By the mid 90’s even mainstream America was catching on. Also the economy had largely shaken off its lethargy. It was growing and creating jobs in a fashion largely unseen since the 1950’s. Thus began the long boom of the late 90’s-a 5 year period in which stocks had annual high double digits appreciation and suffered only 1 period where the markets declined more than 15%. From the 459.27 starting point on 1/1/95 the market would go on to post an increase of almost 220% (excluding dividends) ending the millennium at 1469.25.
Stocks were once again the talk of the day. Whole industries formed around people who were quitting their jobs to day trade equities. My favorite commercial of the era shows a lady who runs home from jogging and pushes her child away from the computer shouting “Make way! Momma’s gotta trade!” Stories circulated of office pools where people picked stocks by throwing darts at the quotes pages of the Wall Street Journal. People were more interested in the markets than anytime since I had been in the business and…..and….and….nobody could have seen this coming at the end of 1994. In fact at that time many might have been tempted to buy bonds which in terms of yield could be found at 6-8% for pretty good paper.
At the beginning of 1998 I left William Blair to go to Alex Brown-(A firm that had recently been purchased by Bankers Trust). It was late summer of the equities boom yet a change was on the way as the markets entered a new and more dangerous period…….To be continued.
*AOL is currently owned by Time Warner (TWX). Mr. English and some of his clients currently hold positions in TWX although said positions are subject to change at any time.
Yet at this point and unnoticed by most, a quiet revolution in technology was taking place. It had really started in the late 80’s as corporate America began to embrace the computer in a big way. It had found its way into the home as consumer price points on personal computers (PCs) came down and as products like the mouse and Microsoft windows made the machines easier to use. Now the scope of this revolution has been better chronicled by others but I want to throw in one point. In the mid 90’s you could walk into any computer store and see setting there on the shelves whole industries in everything from equipment to gadgets to software that simply had not existed 10 years prior. Almost unnoticed by many a whole new world had arisen and all it needed was one spark for it to really catch on. That spark was first provided by companies that built closed computer networks. AOL comes to mind here*. Later it was dominated by the open framework of the internet.
Wall Street had noticed of course and during the early 90’s technology companies had outperformed the overall market. By the mid 90’s even mainstream America was catching on. Also the economy had largely shaken off its lethargy. It was growing and creating jobs in a fashion largely unseen since the 1950’s. Thus began the long boom of the late 90’s-a 5 year period in which stocks had annual high double digits appreciation and suffered only 1 period where the markets declined more than 15%. From the 459.27 starting point on 1/1/95 the market would go on to post an increase of almost 220% (excluding dividends) ending the millennium at 1469.25.
Stocks were once again the talk of the day. Whole industries formed around people who were quitting their jobs to day trade equities. My favorite commercial of the era shows a lady who runs home from jogging and pushes her child away from the computer shouting “Make way! Momma’s gotta trade!” Stories circulated of office pools where people picked stocks by throwing darts at the quotes pages of the Wall Street Journal. People were more interested in the markets than anytime since I had been in the business and…..and….and….nobody could have seen this coming at the end of 1994. In fact at that time many might have been tempted to buy bonds which in terms of yield could be found at 6-8% for pretty good paper.
At the beginning of 1998 I left William Blair to go to Alex Brown-(A firm that had recently been purchased by Bankers Trust). It was late summer of the equities boom yet a change was on the way as the markets entered a new and more dangerous period…….To be continued.
*AOL is currently owned by Time Warner (TWX). Mr. English and some of his clients currently hold positions in TWX although said positions are subject to change at any time.
posted by CR English at 3:00 PM
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