Monday, July 23, 2007

Floyd Norris: Notions on High & Low Finance

The double will have to wait.

The stock market hit one milestone yesterday, 14,000 on the Dow.

And it came very close to another, a double off the Standard & Poor’s 500 low set in 2002. Then the index hit bottom at 776.76 on Oct. 9. Yesterday’s close of 1,553.08 was a gain of 99.94 percent from there. Given the market’s performance today, we will have to wait until another week to get that double.

A double in less than five years is not, by the way, all that impressive. It did take a little over five years to double after the 1990 low reached in the run-up to the (first) American war aganst Iraq. But it took only three years and four months to double off the 1982 low. And it took only three months and a day to double off the 1932 low.

Bloomberg has historical data for the entire time on 477 of the 500 stocks now in the S.&P. index. It reports that 296 of them have more than doubled, and 16 are up more than 1,000 percent. Only 17 of them are lower than they were then — of which, I am very sorry to say, three are in the newspaper industry. They are The New York Times Company, Tribune and Gannett. Other well-known losers include Wal-Mart, Pfizer and Anheuser-Busch. What kind of a bull market penalizes America’s biggest retailer and the makers of Budweiser and Lipitor?

The winner since that 2002 low is Akamai Technologies, which is up 6,945 percent from the 71 cents it fetched then. Akamai is an Internet company, and even with that performance it may have a few unhappy owners. From its closing high of $327.63 on the last day of 1999, it had fallen 99.8 percent by that October day. And even now it is trading for less than a sixth of its old high.