July 4, 2014
Kiev, Ukraine
In one of the most ill-timed columns ever written, Fortune Magazine published an article entitled "10 stocks to last the decade" on August 14, 2000.
The NASDAQ Composite Index was at 3849.69... and within days of the article being published, the index would begin a ruthless decline, taking a whopping 13 years to return to that level.
And as for the 10 stocks which were supposed to last the decade? Two of them (Nortel, Enron) went bust entirely.
One of them (Morgan Stanley) would have gone bust if it hadn't been for a $107 BILLION taxpayer bailout.
Others (Univision, Genentech) were bought out at valuations substantially lower than their August 2000 levels.
The remaining ones (like Nokia) are still out there somewhere, but their stock prices have declined as much as 83% over the last fourteen years.
To put it bluntly, not a single company on Fortune's list of titanic, unbeatable stocks managed to generate a positive return for investors. Everyone lost.
In fairness, this isn't a dig against Fortune; nearly EVERYONE thought that Enron was a sure bet back in 2000. (Although Fortune actually named Enron "America's most innovative company" for six years in a row from '96 to '01...)
Back then no one could imagine that Enron and Nortel would soon cease to exist. Or that Nokia's brand value would be virtually wiped out by Steve Jobs and a bunch of scrappy Koreans.
This is really a fantastic example of how a herd mentality forms about the sanctity and staying power of certain institutions.
It’s human nature to believe that whoever is in the lead now will always be in the lead.
And it’s the same for countries.
Virtually everyone alive today was born into a world in which the US was “#1”, the largest and most important economy on the planet. Hardly anyone can imagine anything else.
Yet ironically, as many Americans are celebrating Independence Day today, it is the last holiday that will pass with the US being the world’s largest economy.
China is set to surpass the US in a matter of months. And this shift of wealth and power is, by far, the biggest story of our time.
Let’s explore this together in today’s Podcast episode. We’ll go back in time and talk about ancient cities, kings and queens, grand palaces, epic battles, and major crises... real Game of Thrones stuff.
And when we’re finished, you’ll see that this time is absolutely NO different. Click the link below to listen:
http://www.sovereignman.com/podcast/011-herd-mentality-14659/
You can also listen and subscribe via iTunes here:
https://itunes.apple.com/podcast/sovereign-man/id842764173
Enjoy your weekend.
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