I was looking at the date and I realized it is roughly 10 years ago that I was hired at Smith Barney (10 years ago owned by Citigroup) to do business development for some advisors there. It got me to thinking how much has changed since then.
10 years ago
Not a single line of code for Facebook had been written.
Google wasn’t a publicly traded company yet.
Apple was $18.80 per share (Now $428.85).
Microsoft was $25.57 per share (lagging a bit behind in performance, it is now $35.85)
On a side note, I remember a broker in 2003 pitching Microsoft to one of his clients, describing the company as “The Rolls Royce of the stock market.” I don’t recall anyone pushing Apple stock.
But Microsoft has still done better than many others who have been completely wiped off the map.
10 years ago Lehman Brothers and Merrill Lynch were huge financial institutions.
Fannie Mae (FNMA) has held on. Unlike the above examples, the stock still exists today…..at $1.42 per share. 10 years ago it was $73.66
Investing for change
It goes to show how much can change over a 10 year period of time. Despite all these changes, the past 10 years have been relatively tame compared to a lot of other decades when you consider decades with WWI, the Great Depression, WWII, or the 60s.
When I think about it through this lens, the idea of diversification and index funds makes even more sense. So much can change over 10 years. Huge companies can fall, while other companies can go from nothing to multi-billion dollar enterprises. Fortunes can be made or lost, and inheritors of wealth are given plenty of chances to lose everything. But for a simple portfolio getting the market average, returns have been roughly 8.5% over the past 10 years. Keep in mind that this includes the crash of 2008, the worst year in the US market since 1937.
Day to day it is sometimes hard for investors to see why really broad diversification is best. A perspective of how much can change over 10 years can help illustrate why spreading your investments across many thousands of stocks (which is what we recommend), boring as it can be, is the best bet.