What's a better investment: Computers, chips, or coffee?
Steve Tobak crunches some numbers to see how technology stocks perform versus traditional stocks over the long haul. Here's how it turns out.
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.