More on Why Former Market Leaders No Longer Lead

I mentioned last month that Old Stars Don’t Lead New Bulls; In light of the recent bloodletting on the Nasdaq, I brought this up on Kudlow & Co. Wednesday evening.

Some people (mostly emailers unable to spell) refuse to believe this. One had the temeritiy to demand some proof.

By coincidence, I just happen to have some. I’m doing a new column on this for RM, and I have been working with the nice folks at the Wilshire Associates. They culled this together from their extensive database. Its a comparison between the market performers from the 10 year period of the 1990s (December 31, 1989 through  Decmber 31,1999). We then compared that with the recent period from the 2002 lows (Septmber 30, 2002 through June 21, 2006). The only requirement was a Market cap of > 1billion (as of the ending date).

Here’s the top 20; If anyone is interested, I can upload the full spreadsheet of the top 50, along with a look at market caps.

>

click for larger graphic

Old_versus_new_leaders

Note how different the sectors are in the groups representing the leadership for each era . . .

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  1. Jake commented on Jul 14

    Quick and Dirty (left out the returns listed NA). The top performers of the previous decade averaged an 87% return since Sept. 02, while the S&P returned 51% and the NASDAQ returned 88%. It appears last decades top performers outperformed / equaled the recent bull.

  2. Ned commented on Jul 14

    temeritiy? culled this together? its?
    better be careful how you label bad emailers big guy.
    Nobody’s perfect.
    LOL and this is gentle ribbing not an attack.
    Enough of those in the world these days.

    BR Damn! I forgot to use the sarcasm code! — Its true, its hard to read saracasm in print sometimes.

    /-snark//

  3. Dave2 commented on Jul 14

    to think that we get led by a soft drink /juice maker …… no wonder we’re in a BEAR market

  4. alanG commented on Jul 14

    i guess there’s life for some fallen dot.com angels — GLW , AKAM …… who knew

  5. BDG123 commented on Jul 14

    New market leaders until they are no longer leaders. Mark my word, I will be eating, not drinking, Hansen for lunch. I am waiting for my short entry and going to ride this sugar water maker to its demise.

    I’ve seen this story time and time and time and time again. Snapple, Cott, Clearly Canadian and on and on and on. Huge runs only to become delisted or penny stocks or be purchased. In fact, the last option is their only hope. The big boys and girls in this space have legions of chemists and super savvy marketeers to slap a label on a new type of sugar water and push these guys on shelf space and revenue until they start missing their quarterly numbers. The moat is an inch deep. A mojo play that was 50 cents a few years ago. The only question is if there will be enough shares for me to ride this pig down hard. This is a sure thing if I ever saw one.

  6. Barry Ritholtz commented on Jul 14

    Damn! I forgot to use the sarcasm code! —

    Its true, its hard to read saracasm in print sometimes.

    /-snark/ mode is now off

  7. Craig H commented on Jul 14

    I’m wondering if the big cap techs (chips and telecoms) the bulls have been pumping for a comeback may actually become the leaders again in the next bull.

    Back in 2000 when the techs were leading we got a parade of guys who said the small caps would take over the leadership. They were right, but it took a bear market and three years for them to be proven right!

    We’ll know when we see the new leader board, I guess.

  8. GcL commented on Jul 14

    BDG123
    tell us when you short HANS …. want to go along for that ride to the bottom

  9. Alaskan Pete commented on Jul 14

    TIMBERRRRRRRRRR!!!!

    If a market falls in the woods, and no permabull pumpers spout off on CNBC, does is make a sound?

  10. Larry Nusbaum, Scottsdale commented on Jul 14

    • 75% of Market Leaders in each cycle were new companies that incorporated in prior then years, 80% paid no dividends, and earning growth was the driver of market leaders, not dividends.

  11. Craig H commented on Jul 14

    How about WFMI and CMG? Those are this market’s Boston Chickens.

    Have some tacos and bean sprouts with your soda.

  12. Bob A commented on Jul 14

    Looks like small caps finally break the trend line… long way down. Will they follow the pattern of the homebuilders?

  13. BDG123 commented on Jul 14

    I thought I would post some silliness from the past. I remember in the early 90s the hot new beverage in the supermarkets were Clearly Canadian. The stock was a screamer. In fact, during its mojo days, I rode the pig for a while. Today, CC is listed on the bulletin board. But, look. The volume since mid 2005 has exploded. People are enamored with Jones Soda, Hansen and…….that brought the retards back into Clearly Canadian in a big way. If this isn’t froth, I don’t know what is.

    http://tinyurl.com/h6kfv

  14. Jake commented on Jul 14

    ameritrade crashed about an hour ago and still seems to be down. when i called in to place my order through a broker they said they could not transfer me w/o my acct # and they could not look up my account # from my user name because there systems crashed as well. do i have any legal action with this if the mkt moves against my account?

  15. BDG123 commented on Jul 14

    ask the investors at Refco. their money was tied up for months.

  16. Jake commented on Jul 14

    refco went bankrupt. not quite the same situation bdg123

  17. BDG123 commented on Jul 14

    its not from a business standpoint. but, you were asking from a legal recourse standpoint. if refco clients couldn’t get at their money for months and they went bankrupt, wouldn’t you think they would have some legal options? but, yet, they didn’t. my point is you likely have little recourse. the only thing that happened was an outage. you signed statements when you opened your account and as much as ameritrade has problems, i’m sure there was a cya in there.

  18. Flm commented on Jul 14

    must be fun being a retail broker/money manager this week !!!! yikes —- I’m looking for another 500 points on DJIA next week , gets to interesting FIB confluence

  19. Alaskan Pete commented on Jul 14

    THE NIGHT BEFORE WHACKMAS (with apologies to Clement Clarke Moore)

    Twas the night before whackage and all through the house, not a permabull was sleeping, ignorant louses.

    The bulls were all long, and hardly aware, that lurking in wait was the big bad bear.

    The rubes were all nestled, snug in their beds, while visions of the IPOs danced in their heads.

    And portfolios with Google, and Cody’s large caps
    were just settling down for the proverbial dirt nap.

    When out on the floor arose such a clatter, the permabull pundits said “PEs don’t matter”.

    Away to the bloomberg I flew in a flash, and loaded up my charts, happy to be in cash.

    With CNBC did my HDTV glow ,Gave the lustre of mid-day to objects below.

    When what to my wondering eyes should appear, but a pumper clown, and his 8 bull seers.

    With a little old shill, so full of shit, I wondered for a moment “who is this dick?”

    More rapid than eagles his coursers they came, and Kudlow ranted and raved and called themy by name.

    On Cramer, on Laffer, on Ronald, on dipshits. The market is leaking and the pump needs fixin.

  20. john commented on Jul 14

    Looks to me like we hit bottom about two hours ago. At least for this week. All the traders gone home – me too.

    I made a bit on HANS today (long side) – it printed a “buy me” formation about 11:30 or so. Got a buck and change and out. Made my week – thanks shorts – let’s do it again sometime.

    I try not to predict because I suck at it but the market has gone from overbought to seriously oversold this week and I wouldn’t be surprised to see a bit of a recovery next. But maybe not – what do I know – nada – just like the rest of ya.

    Have a good weekend – everyone

  21. Ned commented on Jul 14

    Thanks Pete. Not one I can read to my kids, until they are much much older.

  22. wbl commented on Jul 14

    John 1:50
    good thing you don’t predict …. cause you don’t know …
    “nada” as you said ……. chimp

  23. Barry Ritholtz commented on Jul 14

    Any online account holder should have multiple ways of getting an execution — (add schwab and etrade) as well as including a reliable offline BD . . .

  24. warwulf commented on Jul 14

    How can I get the list of the top 50?

  25. Bearish commented on Jul 14

    We still have the big bad middle of the hurricane season coming up.

    First Half of 2006 Is Warmest on Record
    Jul 14 1:06 PM US/Eastern

    WASHINGTON

    The first half of the year was the warmest on record for the United States.

    The government reported Friday that the average temperature for the 48 contiguous United States from January through June was 51.8 degrees Fahrenheit, or 3.4 degrees above average for the 20th century.

    That made it the warmest such period since recordkeeping began in the National Climatic Data Center reported.

    No state was cooler than average and five states _ Texas, Oklahoma, Kansas, Nebraska, and Missouri _ experienced record warmth for the period.

  26. Terence Burns commented on Jul 14

    I, too, would like to see the list of the top fifty. Could you please post it online or would you prefer to email it?

    Liked (still do) your columns on RM, but like BigPicture even better. Thanks for sharing your insights.

  27. Jason commented on Jul 14

    Not to be a jerk, because I like this blog a lot. But this chart shows that the leaders in one market, do not lead the next, but (unlike the heading of this post) it does NOT explain WHY that is true. It points out that is is not true, but it does not get to the “why’ behind it.

  28. sav commented on Jul 14

    no critical questions allowed on this blog Jason

  29. Larry Nusbaum, Scottsdale commented on Jul 15

    Because, Jason, their spectacular growth eventually slows and their market caps swell. Eventually, their product or service attracts other entrants (competition) and ONLY after a large move of the stock does the rest of the world discover it and fall in love with it and over own it as institutions begin the process of unwinding while the bids remain.

  30. niblettes commented on Jul 23

    The Times they are a changing—or maybe we’re just waking up to reality

    I’ve never been a fan of “what’s hot, what’s not” lists. However CNN money has a very interesting article about how the Jack Welch business dogma may be working its way over to the “not” list.
    Now I will admit that Welch has probably f…

  31. I Art Laughing commented on Nov 8

    I laughed so hard I cried Pete. Just remember that “Free-market captalism is the quickest path to posterity” (when you are trading with zero-regulation slave states like China)

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