7-year bull makes investors $16T richer
The bull market celebrates its seventh birthday today. Here's the real accomplishment, though: putting $16 trillion into the pockets of investors.
Investors with the guts to ride this bull market since it first emerged on March 9, 2009 have seen the value of stocks rise $16 trillion, according to market research firm Wilshire Associates. Just to put that into perspective, that's nearly equal to the U.S. gross domestic product of $17 trillion.
Much of those huge market gains were generated by a few runaway stars. Just seven mega-winners in the bull, digital gadget maker Apple (AAPL), online advertising company Alphabet (GOOGL) and software maker Microsoft (MSFT), together generated $2 trillion of the bull market's run, according to a USA TODAY analysis of data from S&P Global Market Intelligence.
"Looking at the performance of individual stocks since (March 9, 2009), there have been some monster gains," according to a report to clients by Bespoke Investment Group.
Part of these stocks' success is due to their massive size when the bull market started. "There is one constant: these nine companies were all large to mega-cap companies on March 9, 2009," says Hank Smith, chief investment officer at Haverford Trust. "So, the biggest gainers by market cap were large to begin with." Some of these big winners were also the result of valuations getting beaten down, leaving plenty of potential upside for the brave investors who stepped up.
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Some of the bull market money minted by individual stocks is downright impressive. Apple holds the top spot having added $487 billion to investor wealth since the bull started seven years ago, or 4% of the roughly $11.3 trillion in wealth created by companies in the Standard & Poor's 500. Shares of Apple jumped 751% during the period to $101.12, which is remarkable given that the company was already valued at $74 billion back in March 2009. The runaway popularity of Apple's smartphone turned it into an constant winner during the bull. The company's revenue has jumped 448% from 2009 to end 2015 at $235 billion.
Stocks that got hammered during the financial crisis were also set up to profit handsomely for investors. Banks Wells Fargo (WFC) and JP Morgan Chase (JPM), but also General Electric (GE) which was heavily dependent on its financial unit in 2009, were hit hard during the financial crisis. That means they were primed to perform and generate lots of wealth for investors once the crisis eased, Smith says. These stocks "were overly beaten up by the end of the bear market and experienced big bounces to more normalized levels," Smith says. General Electric's stock had dropped to $7.41 in March 2009, but has soared 306% since to $30.05.
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Blistering growth in the business doesn't hurt either. Alphabet and online retailer Amazon (AMZN) have seen their revenue soar 217% and 337%, respectively, between 2009 and 2015. That massive upswing wasn't missed by investors. Alphabet has generated $408 billion since the market bull started thanks to a nearly 400% jump in its stock to $705.24. Amazon created $237 billion in market value thanks to a whopping 825% gain in the stock to $559.47.
These huge gains are a reminder to investors of why investing in stocks over the long term is still well worth the volatility and occasional distress it might cause. Some investors might wonder if the bull market is about to fade out, given some of these huge gains and how old it is. Amazon, for instance, is one of the most pricey stocks you can buy with a price-to-earnings ratio on past earnings of 444. But that's the exception, not the rule, Smith says.
"The good news here is that despite the massive gain in market-cap there is not an over-valuation problem," Smith says. "That was clearly not the case with the largest companies at the end of the 1990s."
BIGGEST WEALTH GENERATORS IN BULL MARKET *
Company, symbol, market value created ($ bils.), % Ch.
Apple, AAPL, $486.7, 751.7%
Alphabet, GOOGL, $407.6, 398.8%
Microsoft, MSFT, $283.2, 248.8%
Amazon.com, AMZN, $237.5, 824.9%
Berkshire Hathaway, BRKA, $230, 185.9%
Wells Fargo, WFC, $205.4, 389.4%
General Electric, $202.1, 305.5%
* Among S&P 500, from 3/9/2009 close
Sources: S&P Global Market Intelligence, USA TODAY