Tuesday, November 27, 2007

Bank Stocks Outperform Market in The Long Run

Bob Wright wrote in a recent comment "If you look at financial stocks over any meaningful period - like 10 years or more, they kill the DJIA and the S&P 500. They even out-performed over the last 5 years until this recent bit of turmoil."

The chart above (click to enlarge) shows the performance of NASDAQ Bank Stocks (blue line) vs. the NASDAQ Composite (green) and the S&P500 (red) from 1990 to 2007. Consider that $100,000 invested in the NASDAQ Banks stocks in 1990 would have grown to $1,137,000 today, vs. $782,292 today if you had invested $100,000 in 1990 in the NASDAQ Composite, and only $469,812 if you had invested in the S&P500. In other words, you would have almost $700,000 more today from your $100,000 investment in NASDAQ Bank Stocks in 1990 compared to the same initial investment in the S&P500.

Bob is right.


At 11/27/2007 9:30 PM, Anonymous Anonymous said...

10 years isn't really the "long run". How about a 20 year or 30 year "really long run" chart

At 11/27/2007 9:49 PM, Blogger Mark J. Perry said...

The NASDAQ Bank Index only goes back to 1990.

At 11/27/2007 10:29 PM, Anonymous Anonymous said...

You learn something new about the stock market every day. Thanks, didn't know there was such an bank index.

At 11/28/2007 4:15 PM, Blogger Paul Adams said...

This also corresponds to the time of "easy money". Let's see how it looks 5 years from now.


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