by Gary Alexander
December 31, 2024
With just one more trading day left in 2024, it’s too early to issue a final report card for 2024, much less December, nor that tardy Santa Claus rally, which traditionally includes the first few days in January, but it’s certainly not too soon to evaluate the first 25 years of the new century (please don’t argue that a century begins in Year 1, like 2001 – not with all the grief everyone gave us about Y2K threats in 2000!).
In late December 1999, when the bears were all a-twitter (long before Twitter) about Y2K crashing planes and breaking the engine of the world, I wrote (in my column “This Day in Market History”), “In all the fear of Y2K, have we ignored the potential for unknown breakthroughs coming soon?” I reminded readers that the first few years of the 1900s brought great inventions, with the first few falling in mid-December.
Was there a stock market boom in those years? Not a chance. From June 17, 1901, to September 25, 1911, the Dow Jones Industrial index fell 32.2%, from 57.33 to 38.83, much like the market swoon from March 2000 to March 2009 in this century. The Dow fell for three straight calendar years, 1901-3, off by 30%, then it fell further in the Panic of 1907 (-38% in 1907 alone), then falling another -18% in 1910.
As I indicated 25 years ago, scientists were creating a positive future while traders lived in fear: “In all the fear of Y2K, have we ignored the potential for unknown breakthroughs coming soon?” Even though the market struggled through three major market crashes in 2000, 2002 and 2008 (just like 1901-3 and 1907), the technological foundation for the 21st century was being invented in those dismal Wall Street years.
All this was happening in the tech sector while the tech-heavy NASDAQ was tanking by up to 73%:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
But fear not, dear investor! The first eight or nine years do not a full century make.
The next 15 years created stellar returns for the U.S. market, especially compared to the rest of the world:
25-Year Market Returns for U.S. Stocks and Gold vs. China and Europe
After a decade of life-changing inventions and loud market crashes, the U.S. market began to reward investors, while Europe and China stagnated, and gold quietly surpassed all global stock markets:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
So, why did China and Europe fade in the stock market scorecard after beating the U.S. in the first decade of the new century? The major answer is the nature of their command-and-control economies, first with over-regulation and over-taxation in Europe, discouraging innovation, and then China retreated from 33 years of rapid growth (1979-2012) in their mixed capitalist/communist economy under Deng Xiaoping (1978-89), Jiang Zemin (1989-2002) and Hu Jintao (2002-12) to ‘Dictator for Life’ Xi Jinping since 2012.
Last Friday, Stephen Moore shared the following mock Venn diagram of the advantages of technology in the three centers of global growth. You can quibble about whether China invents new technology or steals it, but Europe has hardly hatched a new idea in the last 50 years, as they offer few rewards for innovation.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
We could also add that Europe leads the world in anti-trust lawsuits against American companies, but that will likely come to a grinding halt under the threat of Trump 2.0 tariffs – and various other counter-threats.
Looking Back 250 Years and Forward 25 Years
Looking back 250 years, I’d say that America has also won the long-term performance derby, beginning with a “shot heard round the world” in April 1775, but Britain won the first half of that race due to their launch of the Industrial Revolution with James Watt’s invention of the steam engine that same year, 1775.
We had our Declaration of Independence in July of 1776, but Britain may have trumped us, with Adam Smith’s “Inquiry into the Nature and Causes of the Wealth of Nations” published March 9, 1776, and a blueprint of their own decline in the first volume of Edward Gibbons’ “Decline and Fall of the Roman Empire” in 1776. Britain was still ahead of America 50 years later, when it launched the first railroad 200 years ago in 1825. But it’s clear that the French Revolution (1789), and subsequent revolutions in Haiti (1798) and throughout South America in the 1820s were less free than America’s glorious birth in 1775.
In closing, it’s entertaining to project where the U.S. stock market and gold will be in in 25 years, if they merely gain what they gained over the last 25 years, ignoring inflation. We can dream, can’t we?
I likely won’t be around in 2050 (at 105), so y’all enjoy your $24,000 gold and 95,000 NASDAQ.
Navellier & Associates owns Alphabet Inc. Class A (GOOGL), and Meta Platforms Inc Class A (META), in managed accounts. A few accounts own and Tesla (TSLA), per client request only. Gary Alexander does not own Alphabet Inc. Class A (GOOGL), Meta Platforms Inc Class A (META), or Tesla (TSLA).
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
My Final Three Predictions for 2025 (And Updates on the First Three)
Income Mail by Bryan Perry
History Favors the Bulls Following Recent Presidential Elections
Growth Mail by Gary Alexander
A Report Card on the First Quarter of the 21st Century
Global Mail by Ivan Martchev
2024 Was Great, But What About 2025?
Sector Spotlight by Jason Bodner
Holiday Trading Days Mean…Next to Nothing
View Full Archive
Read Past Issues Here
About The Author
Gary Alexander
SENIOR EDITOR
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
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