The decade is almost at an end. Who would have thought that after suffering through a near 60% decline in the S&P 500 through early March 2009 — the worst bear market since the Great Depression — the bull would still be alive and kicking 10 years later, asserts Sam Stovall, chief investment strategist for CFRA Research's The Outlook.
Granted, investors dealt with two bear maulings — in 2011 and 2018. Since December 31, 2009, however, global issues rose 99%, while large caps gained 188%, straddled by mid- (+183%) and small-cap (+207%) benchmarks.
It was certainly a growth-oriented decade, as the S&P 500 Growth Index’s 232% surge bested the Value Index’s valiant 144% effort.
Along the way, 10 of 11 sectors posted advances, led by consumer discretionary, health care and technology. Communications services and materials lagged, while energy fell in price.
Finally, 93% of the S&P 1500’s 124 sub-industries in existence for the entire period increased in price, led by Internet retail, managed health care and application software. Conversely, eight sub-industries endured double-digit declines, led by coal, diversified metals & mining and oil & gas drilling.
What awaits investors in the coming decade? Noa one knows for sure, but on a sector level, history implies (but does not guarantee) that the best sectors in the prior decade will not repeat as leaders in the coming decade.
Indeed, the top three sectors from 1989 through 1999 went on to fall an average of nearly 28% in the 2000s, while the three worst sectors surged an average of 46%.
What’s more, the top three sectors in the 2000s gained an average of 76% in the 2010s, while the bottom three jumped 182%.
Representative companies with the highest 10-year returns from the decade’s best S&P 1500 sub-industries are: Amazon (AMZN), Centene (CNC), Cadence Design Systems (CDNS), Home Depot (HD), Mastercard (MA), O'Reilly Automotive (ORLY), Cintas (CTAS) and Constellation Brands (STZ).
