Written by Kari Firestone
On the anniversary of the Crash low on March 6, 2009, at 666 for the S&P 500, I want to commemorate that day both for the reverberating trauma it caused, but, more importantly, for what came after. Honestly, I feel enormous luck and gratitude that our company, Aureus, hung in there, didn’t sell at the bottom, remained an active equity manager these last ten years, and has prospered since. I remember that day, and so many like it, from that sense of hope when I woke at 5:15 each morning, through the increasing dread as the futures pointed down, and further down, through the meteor-like falling of so many trading sessions, without pause, for many months. During days such as March 6th, I tried tricks like turning my screens to other views, walking around the block, praying that everything would have jumped up 5% by the time I returned, and coming back to find those same screens entirely covered with bright red numbers.
However, that day marked the low, and we have had the most amazing ten year stretch ever since. From the low of 666, the S&P has risen 320%; $100 invested at the end of that day would be worth $437 today. Put another way, the ten year compound rate of return on the S&P 500 has been 15.9%, which is one of the highest return rates over a ten year period that this index has ever attained in my working life, other than looking back from August 2000, right before the dot-com bubble burst and the market tumbled over 45%.
That, however, was a very different and much less comfortable market. The Nasdaq had already collapsed 20% from the internet bubble, I owned many of those dot-com stocks, and that index was swan diving into the tank. Although the S&P held up longer, it felt precarious that spring and summer of 2000, at over 24 times earnings.
What has been amazing over the past ten years is that the average American, with a small amount of savings, or a 401k plan, has been able to participate in this gain. While Venture Capital, Private Equity and Real Estate are often considered “sexier” and more “interesting” investments by wealthy individuals and endowments, the US market has offered outstanding returns with a very low cost of entry, daily liquidity and high levels of transparency, unavailable in those other assets.
What happens now? This market sells for 16 times earnings, which is roughly the long term average over the past twenty five years. There is a lot to watch over the next few months. The market could move on to better or worse earnings, the China trade deal, Brexit terms, and huge IPO launches will all play a part. Up or down.
Today, I am just grateful to have participated in the past decade of the stock market and I sure love looking at the ten year returns. Let’s toast to the next ten!