Hey, it only took 18 years to eclipse the prior high in purchasing power terms! Better than the Great Depression!
This is an update of a post I did less than three years ago. In that relatively short time, the NASDAQ Composite hit an all-time record in purchasing power adjusted terms. Quite an ascent in the last two years. I never would have predicted it. If you took the other side of my advice you did better.
That said, the S&P 500 is forecast to return 3.4%/year prior to inflation for the next ten years. Aside from one quarter during the go-go years (1968), the only period with lower anticipated returns was during the dot-com bubble. The levels you see today will be revisited going the other way.
Are you too “chicken” to buy the NASDAQ Composite? Then you are like me.
The last time I wrote on this, I asked whether it would be better the NASDAQ Composite [IXIC] or Industrias Bachoco [IBA]. IBA is the second largest producer of chicken in North America, and is now expanding in the US. From the time I wrote the last article it has returned 20%. NASDAQ Composite? 47%.
That said, I still prefer IBA for the future. Strong competitive position, little debt. Intelligent tuck-in style of M&A, showing intelligent capital allocation. 1.7x book. 12-13x earnings. If it weren’t a Mexican firm, it would be valued a lot higher. IXIC’s valuation metrics are roughly double those.
All that said, IBA beat IXIC over the 12.5 years I have owned it. 487% vs 401%. And if you were measuring from the top of the dot-com bubble the return difference is 1460% vs 71%.
IBA still has a lot of room to expand, and is subject to less competition and antitrust threats than many large technology companies.
Not that you should run out and buy IBA (caution: thin market), but what do you do if you are looking for ideas that could be good, but not as much in the spotlight as the companies that make up the bulk of the NASDAQ Composite? I’ll quote the end of my last article, because the ideas are good, and will likely do better than buying hot ideas now.
…where are the good assets that few are looking at?