April 9, 2008 6:02 AM PDT

What's a better investment: Computers, chips, or coffee?

Sometimes I'm so uninspired I can't come up with a decent blog post to save my life. When that happens, I turn to what comforts me: numbers. Yes, I know how weird that sounds. What can I say, I'm a geek.

Anyway, I just got to wondering how investors in various technology companies fared over the long haul. I was just as interested in how technology companies performed versus companies with a more traditional business model.

I chose an 18-year period from April 6, 1990 to April 7, 2008.

As for a baseline, the Nasdaq's annual return was about 10 percent, compared with 9 percent for the Dow and 8 percent for the S&P 500 over the same period.

I was surprised that Dell and Cisco Systems topped the list; I guess I expected better performance from the software companies, but I'm not sure why.

As you can see from the chart, the likes of Merrill Lynch, Exxon Mobil, Pfizer, and GE performed quite well versus their technology brethren. While not included in the chart, Procter & Gamble and Wal-Mart also experienced good annual returns--about 15 percent and 14 percent, respectively.

Although Starbucks was too young to make the list, shares of the coffee giant experienced a 23 percent rate of return since going public in 1992.

I didn't include Texas Instruments in the chart, but its growth rate was essentially identical to Intel's. Not surprisingly, Linear Technology and Analog Devices--both excellent Wall Street performers--experienced growth rates of about 26 percent and 20 percent, respectively.

I also enjoyed checking out Berkshire Hathaway. Warren Buffett's company closed at $132,000 a share today. And you thought Google was overdue for a split. Just in case you were wondering, shares in Google are up about 48 percent on an annualized basis since the company's 2004 IPO. As for long-term performance, well, I guess you'll have to check back in 14 years or so.

What does all this prove? Nothing, really. But we did learn that investors in Cisco and Dell have nothing to complain about. Also, that investors can do as well with coffee, oil, and drugs as with computers, software, and chips. But you might want to go easy on the Big Macs and Big Blue.

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Add a Comment (Log in or register) 2 comments (Page 1 of 1)
by April 9, 2008 8:47 AM PDT
I am a registered investment advisor and I find this analysis rather interesting. Thank you for giving people the longer term perspective. One thing, though: In hindsight we can easily find stocks that perform 37% compounded. As Woody Guthrie said "If it doesn't go up, then don't buy it." It is entirely another problem to find a portfolio of stocks that will in the future go up 37%. If you email me, I will send you a book I have written on the subject for free to those who promise to read it. Joe Alotta ( jalotta at earthlink dot net).
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by swag April 9, 2008 9:25 AM PDT
Everybody thinks they can beat the market with their cleverness and personal time investment. More power to you. But among those three options, I'll stick with a brain-dead index fund instead, thank you very much.
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  • About Train Wreck

  • Steve Tobak is a marketing consultant and former chip industry executive. Train Wreck provides insight into dysfunctional corporate behavior, among other things. When he's not airing the industry's dirty laundry, Steve likes to hang around the house, make believe he's working, and drive his wife crazy. Find out more at www.invisor.net or email Steve at trainwreck@invisor.net. Disclosure.

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