There are only a few days left in the 2010s, so it’s only appropriate we consider the decade that was. It’s hard to condense 10 years of a bull market into 10 stories that mattered to investors over the past decade. I’ll try to do it justice.
There’s no question that the 2010s were very good to investors who stuck with the S&P 500. Through the end of November, the index had a cumulative return of 246%, 39 percentage points higher than REITs, and 49 percentage points clear of small-cap stocks.
While there have been a lot of interesting investing stories in the 2010s, these are the 10 I believe deserve to be on our list — not all of them for good reasons.
Here’s looking forward to the greatest investing stories of the 2020s.
However, it’s not the stock’s investment gains that make it a great investing trend of the 2010s. It’s the fact that Netflix completely changed the way people consume TV shows and movies.
I can remember back in 2004, before getting married, friends of ours had to leave our New Year’s Eve party so that they could go home and binge on “24,” the show starring Kiefer Sutherland.
Fast forward three years, and our friends were binging on Netflix, not DVDs.
Also, Netflix’s domination forced Disney (NYSE:DIS) CEO Bob Iger to reimagine Walt’s company bringing out not one but two video-streaming services over the past 21 months.
Could Disney be on the 2020s list? We’ll see in a few short years.
Exchange Traded Funds (ETFs)
Once upon a time, if you wanted to invest in a portfolio of stocks, you either had to have a lot of money, or you bought an actively managed mutual fund. In both instances, fees were high, and service was mediocre.
And while the first real ETF in the U.S. was created in January 1993 — the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) — it wasn’t until the 2010s and one of the longest bull markets that ETFs became an important investment vehicle for retail and institutional investors.
In June 2009, just months before the start of the 2010s, BlackRock (NYSE:BLK) acquired the iShares ETF franchise from Barclays (NYSE:BCS) for $13.5 billion in cash and stock. The British bank’s shareholders would own 19.9% of BlackRock.
For any Barclays shareholders that held on to BlackRock shares, CEO Larry Fink would deliver a total return of 9.3% in the 2010s. That might not seem like a lot, but it’s much better than Barclays’ 10-year total annualized return of -2.2% over the same period.
Technology and Pizza
A couple of years ago, a chart was making the rounds illustrating the beatdown Domino’s (NYSE:DPZ) stock was putting on tech-heavyweight Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) since going public in the summer of 2004.
I couldn’t help write about the very subject in April 2017.
A lot of the credit for Domino’s impressive performance over most of the 2010s was due to former CEO Patrick Doyle, who took charge in 2010 and proceeded to turn the company into a tech company that just happened to sell pizzas.
Since Doyle stepped down in June 2018, the company hasn’t slowed down its tech emphasis. On Dec. 9, Domino’s announced that 25% of its U.S. stores would have GPS tracking so customers would know exactly where their pizza was in the delivery process. In 2020, it intends to roll out GPS to 100% of its units in the U.S.
In addition, it continues to work on autonomous delivery, so that you can get a pizza with or without a shortage of drivers.
Domino’s 10-year annualized total return is a sizzling 44.1%.
These next three trends are all IPOs that have done well since going public.
The first one is Beyond Meat (NYSE:BYND), the people behind the Beyond Burger, which went public in May at $25 a share. Up 209% since its IPO, it hit an astounding 52-week high of $239.71 in late July, just three months into its life as a public company. Since then, BYND stock has taken on a lot of water as the competition’s heated up.
Never mind the negative commentary, CEO Ethan Brown’s got a good plan to grow that includes introducing plant-based imitation chicken at some point in 2020.
In the meantime, it’s important to remember that Beyond Meat’s a young company in a very young industry. It’s got plenty of growth ahead of it. UBS analyst Steven Strycula believes that it will grow its sales from $275 million in 2019 to $1.8 billion in 2025, a compound annual growth rate of 37%.
It’s hard to believe Tesla’s (NASDAQ:TSLA) only been a public company since June 2010, but it’s true. Selling 13.3 million shares at $17 apiece, significantly higher than the 2.2 shares it had planned to sell, TSLA stock is up 2,282% since its IPO, making it one of the best-performing stocks of the 2010s.
Love him or hate him, Elon Musk has pushed and prodded the major automobile manufacturers into the 21st century, and in the process, delivered quality electric vehicles to the buying public.
Like plant-based meats, electrification has a role to play in saving our planet.
Earlier this year, Musk tweeted that he ought to take TSLA private at $420. Now trading within $15 of that mark, the number’s looking awfully low.
Finally, as we head into the 2020s, Tesla has begun trial producing Model 3s to sell to the Chinese at 20% less than its current retail price.
While Facebook (NASDAQ:FB) is considered a social media company, it’s a digital advertising platform that happens to be called Facebook. Before Facebook, Alphabet had the digital advertising world virtually to itself.
Then Mark Zuckerberg and Facebook came along and carved out a massive chunk of the global digital ad market; long-time FB shareholders are certainly glad he did. Facebook stock is up 442% since it went public on May 18, 2012, and 1,044% from its low of $18 shortly after its IPO.
Furthermore, not only has Facebook created opportunities for other social media platforms to benefit from digital advertising, but it has forced our governments to reconsider how far it’s willing to go in the name of capitalism.
Facebook has unintentionally put a spotlight on privacy; that’s excellent news for consumers of all stripes.
The Rise and Fall of the Shale Industry
One of the poster children for the boom and bust of the shale industry has got to be Chesapeake Energy (NYSE:CHK), an Oklahoma City-based oil and gas company with a market cap of just $1.8 billion, a sliver of the $37.5 billion it was worth a decade ago.
The shale industry has become a profitless pit whose production levels are simply unsustainable.
“I talk to those guys, all the fracking companies, on a daily basis. I’m very engaged in what they are doing with their business, and I completely believe that the current model is unsustainable,” said Scott Forbes, vice president of the Lower 48 for energy consultant Wood Mackenzie.
If this is what energy abundance looks like, America should have said no thank you a long time ago. Instead, it’s likely to face an environmental nightmare as frackers across the country go broke and abandon their wells. It’s regrettable.
Sportswear Becomes Everyday
Fintech entrepreneur and blogger Howard Lindzon has been talking about Nike (NYSE:NKE) and Lululemon (NASDAQ:LULU) for years. Today, Lindzon calls them his fashology stocks. The other is Apple (NASDAQ:AAPL):
These stocks all have one thing in common: they produce must-have fashionable products that can be worn for all kinds of situations, business or personal.
Back in 2010, Lindzon had this to say about LULU:
“Lululemon continues to win because they are the ‘Facebook of ladies behinds.’ Women love the way they look in LULU. Case closed. LULU is unchallenged by anyone in this growing space and the fact is at 126 stores; this trend is early.”
Early to this secular trend, the 2020s could be even more significant than the 2010s for shareholders of Lululemon and Nike. Even Under Armour, which has had a rough go of it in recent years, appears to be coming out of its funk.
Warren Buffett Hits It in the Woods
Yahoo Finance recently took a look at the biggest winners and losers of the 2010s. One of the losers was Kraft Heinz (NASDAQ:KHC), which lost 58% of its value between the beginning of 2010 through Dec. 3.
For those who don’t remember, 3G Capital, with the help of Warren Buffett, acquired HJ Heinz in February 2013 for $23.2 billion. Cost-cutting, a 3G trademark, ensued. The partners then went looking for another food company to buy. In March 2015, Heinz merged with Kraft, a deal estimated to be worth $50 billion. Heinz shareholders owned 51% of the combined company with Kraft shareholders owning the rest.
To make matters worse, 3G and Buffett paid Kraft shareholders a special dividend of $16.50 a share. Even more job cuts came with this merger.
Interestingly, just as processed food companies such as Kraft Heinz were losing customers, healthier alternatives such as Beyond Meat were gaining customers.
Coincident? I think not.
Buffett prides himself on being able to make quick decisions regarding acquisitions. He probably should have taken longer to consider the downside of such a move. It’s easily the worst investment of his career and it happened in the 2010s.
The End of the Industrial Conglomerate
General Electric (NYSE:GE) has a 10-year annualized total return of 1.3% through Dec. 18. Despite interest rates being low throughout the 2010s, investors could have done better with a high-interest savings account than investing in the industrial conglomerate Jack Welch built.
CEO Larry Culp is working hard to turn the behemoth from being a cash flow user to a cash flow generator. While that’s not easy, investors have pushed GE stock higher in 2019 — it’s up 47% year to date — on news that industrial free cash flow this fiscal year could be as high as $2 billion, a significant change from the company’s March projection of $0 to -$2 billion.
While the projected change in free cash flow in 2019 could be as much as $4 billion to the positive [from -$2 billion to $2 billion], it’s important to remember that GE began the 2010s with free cash flow of $14.2 billion or seven or eight times what it is today. The days of the cash flow-generating industrial conglomerate are a thing of the past.
Larry Culp didn’t kill GE, but he might be the one who turns out the lights.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.