I
saw something scroll across the old TV screen this morning that kind of made my
blood boil just a little bit. It was a scrolling text that appeared on
BNN which said "Nasdaq Hits 11 Year High". Now normally BNN,
which is by far the best Business News Network on the
planet that I'm aware of, doesn't get into very much cheerleading. And when declaring that the NAS had hit an 11 year high... in
nominal terms they were telling the truth. But a headline like that just
infuriates me because it's designed to give the impression that the equities
markets are doing real, real well. They aren't! I decided to
demonstrate that fact by showing how the equities markets have performed in
real terms during those same 11 years.
In
the chart below, we take a look at the NAS 100 as it has performed relative to
real stuff... some of which are things that we use for our day to day
activities and indeed our very survival. I would have preferred to have
been able to have included more commodities but unfortunately StockCharts does
not yet offer commodities charts. So we'll have to use the $CRX, which is
an index of commodities only related stocks as a proxy for the broader
commodities markets. Some will argue that gold and silver shouldn't be on
the chart either. But I would ask those people this question: "11
years ago would you rather have purchased $100,000 worth of shares in the NAS
100 or $100,000 worth of gold bars?" End of discussion. We move forward.
The
weekly chart below goes back 11 years, and
we examine what has happened with the price of various asset classes since that
time. All of them begin at zero:
And
sure enough, just as BNN reported, the NAS 100 has indeed returned to it's
price of 11 years ago. It has regained all the losses it had incurred
since late 2000, which is actually a bit more precise than the 11 years claimed by BNN.. In any event, the bottom line is that the NAS 100 has gone nowhere in the past 11 years except to
have made a round trip to hell and back. After 11 grueling years, it is now FLAT. YAY!
In
the meantime, during that same period West Texas Intermediate is up by a
whopping 247%. Had an investor purchased $100,000 worth of NAS shares
back then, he would now have all that money back. WHEW... that was a
close shave! But it kind of makes a person think, "Geez, I kind of
wish I'd bought oil instead." And why not, because that same
investment would be worth $247,000 today. Let's not even talk about
silver. On second thought... let's. Had that same investor
purchased silver instead,
he'd be sitting on an investment that parlayed his $100,000 into a small fortune worth $639,000.
he'd be sitting on an investment that parlayed his $100,000 into a small fortune worth $639,000.
So
here's the bottom line: had an investor purchased any of the following
asset classes instead of equities, he'd be one heck of a lot better off.
Here's what an investment of $100,000 would be worth today had the investor
purchased:
Heating Oil
$234,000
West Texas Intermediate
$247,000
Commodities stocks $309,000
Copper
$335,000
Gold
$545,000
Silver
$639,000
In
other words, in the past 11 years, when compared to the same asset classes, all
of which are "real things" except for the commodities stocks, here's
how the NASDAQ 100 has stacked up:
WHEN
COMPARED TO THE COST OF:
NAS 100 HAS LOST
Heating Oil -57.26%
Heating Oil -57.26%
West Texas
Intermediate
-59.51%
Commodities
stocks -67.64%
Copper -70.15%
Copper -70.15%
Gold
-81.65%
Silver
-84.35%
NOTE: Gold is not shown on
the chart due to limitations imposed by StockCharts by limiting the number of indexes that can be included on one chart.
In fact, when compared to any asset class that is made up of real goods, all the equities markets show the same shockingly poor results. How much does that pound of coffee cost you today compared to 11 years ago? That box of cookies? A pound of ground beef? As I have uttered in several other articles that expose how dismally equities have actually performed in real terms, "No folks, when the equities markets are soaring, you are not getting your money's worth.".
For anyone who might be interested, here is a list of some of those studies:
The Copper Canary
$CRX - Beginning to Rumble
Oil Confirms the S&P 500 Lost Decade
=======
For anyone who might be interested, here is a list of some of those studies:
The Copper Canary
$CRX - Beginning to Rumble
Oil Confirms the S&P 500 Lost Decade
=======
On
a side note, for those who might also be interested in seeing an honest "no
agenda" business network in action, here's a link to the video library at BNN. Every segment of their entire
programming day is available approximately 45 minutes after it has aired live
in Canada. There are often some wonderful guests who, when asked a
question, are allowed to answer it in full, without interruption and given all
the time they need. Quite refreshing compared to the usual media spin machinery
we see in other nations. It's a fun day when Mark Faber is invited into the studio and sits in the guest commentator spot for a full two hours, offering his perspective on each story after it is told. The most refreshing difference between the Canadian anchors and those from other business networks is that when they ask a question they want to hear the answer just as badly as viewers do. Therefore, plenty of time is allowed for the guest to answer it in a cordial discussion type of format. I've introduced the BNN video library to many of my American friends and to a man they are in awe of the classy, dignified and respectful way BNN operates. And as an added bonus, surprise surprise... we get a lot more valuable information that way. Try it out!
.
.
