Best investments of the decade: from Netflix to Bitcoin to palladium
11:29, 27 December 2019
As we approach the final days of 2019, it is time not only for year-end but also for end-of-decade lists.
A lot can happen in a decade. The United Kingdom decided to leave the European Union. Donald Trump became president of the United States. Leonardo DiCaprio finally won his well-deserved Oscar.
The past 10 years have brought a myriad of events for us to digest, with many of them remaining unresolved as we are heading towards the 2020s. Global economic and political arenas have been rather heated: the US-China trade tensions, ongoing Brexit saga, government crisis in Italy, the Hong Kong protests, Spain’s Catalonia crisis, rising fears of a recession in Germany, the Fed’s rate cuts, tanker wars, the 2019 UK general election, Trump’s impeachment and unceasing migration and refugee issues have only added fuel to the fire.
However, regardless of all the turbulence, the past decade was a real game-changer for the global financial markets. Recovering from the financial crisis, the 2010s have been marked by the rapid development of technologies. No part of our world has gone untouched, from entertainment to banking services, hardware to software, business life to personal life.
Thus, technology companies left others in the dust as consumers demanded more innovations. The semiconductor sector was flourishing thanks to the rise in cloud infrastructure and data centres. Some metals, such as palladium, took advantage of the booming automotive industry. Blockchain and cryptocurrencies emerged from small, developing projects into a large, well-established and influential industry.
As the 2010s are officially drawing to a close, in this article, we review some of the best investments of the decade.
Top 10 best investments or treasure hunting in the stock market
The past decade can be rightfully called one of the most successful for the global stock markets.
European, Asian and parts of emerging markets have enjoyed solid gains. However, the United States has become an undisputed leader by a wide margin. While its stock market had minor bouts of volatility, every correction turned out to be a great buying opportunity.
The S&P 500, for instance, has returned nearly 205 per cent (with dividends reinvested) from December 2010, while the Dow Jones Industrial Average has returned overmore than 200 per cent, making these one of the best-performing indices of the decade.
For technology stocks, the 2010s have been a remarkable period in terms of both growth and stock performance. Throughout the decade, the Nasdaq 100 Index has gained almost 400 per cent.
Much of that growth came from a small handful of what are now some of the largest companies around the globe. At the start of the decade, the combined market capitalisation of Amazon (AMZN), Apple (APPL), Microsoft (MSFT) and Alphabet’s Google (GOOGL) was $716bn. Today, that number stands at nearly $4.3trn.
And not to forget about the social media giant Facebook (FB) that went public in May 2012 at $38 per share and now boasts of the market cap of over $585bn.
Below, we take a look at the 10 best-performing stocks that have provided game-changing returns for investors who got in 10 years ago, right after the financial crisis:
Let’s break down the five best investments from the list.
Streaming giant Netflix (NFLX) is far ahead of the pack. Traded at only $7.87 at the beginning of 2010, the stock has surged significantly, earning a spectacular 3,767 pr cent return over the past 10 years. Therefore, an initial $100 investment at the beginning of the decade would now be worth almost $4,000.
Nevertheless, it remains to be seen whether Netflix will be able to remain strong in the 2020s as new entrants in the streaming space threaten its once-dominant presence.
A runner-up on the list is Novanta (NOVT), a lesser-known name compared to Netflix. The company designs, develops, produces and sells precision photonic and motion control components and subsystems aimed at the medical and industrial sectors. With its numerous small acquisitions made over the past few years, Novanta is poised to continue growing its market share in the industry.
Famous among broker-dealers and institutional investors, MarketAxess Holdings (MKTX) takes third place on the list, with returns of 3,180 per cent over the decade. The fintech company runs an electronic bond trading platform, greatly improving the process for international investors who traditionally traded bonds over the counter. The reason behind the stock’s outperformance is that the bond market has become more popular over the past few years, boosting the company’s commission and post-trade services incomes.
Based in Canada, Tucows (TCX) is a small yet successful business that can proudly boast of returns of 2,360 per cent over the decade. The domain name registration and fibre-based internet service provider is now as strong as ever, with the company continuing to expand into new markets.
As semiconductor stocks have been another well-performing industry of the 2010s, it may not come as a surprise that Broadcom (AVGO) is also on the list of the best-performing stocks. At the start of the decade, its stock traded around $17 per share and now stands at $327, gaining $2,140 in revenues over the past 10 years. Vivek Arya, an analyst at Bank of America, said in a note to clients: “With 45 per cent + EBITDA margins, Broadcom is among the most profitable semiconductor companies, which is likely to continue to drive strong cash returns.”
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What about commodities?
The 2000s were a great decade for commodities, mainly due to the massive infrastructure spending by China. Unfortunately, the 2010s did not follow the same path, with the Bloomberg Commodity Index down nearly 45 per cent this decade. The price of WTI Crude oil dropped more than 27 per cent.
However, there were still some major gainers. Throughout the decade, palladium and gold have become the two best-performing commodities, with their prices up close to 335 per cent and 33 per cent respectively. While the auto-catalyst metal enjoyed increased industrial demand, the yellow metal remained the number-one hedge for inflation and the world’s troubles.
Analysts predict that palladium could skyrocket to new record highs above $2,000 if there is another supply squeeze like this year.
Not to forget about cryptocurrencies
The list of the best investments of the decade would not be complete if we did not include one of the most rapidly developing industries of the 2010s – cryptocurrencies.
As the most popular and widely accepted digital currency, the price of Bitcoin has soared dramatically during the past 10 years. Major news outlet CNN has named BTC the “star investment” of the decade, ahead of stocks, bonds, commodities and fiat currencies worldwide.
Based on a recent report by Bank of America Securities, if you invested $1 in BTC at the start of the decade, your investment would now be worth more than $90,000. Boasting of such a stellar growth, Bitcoin has become the best-performing cryptocurrency in the market.
The bottom line
As technology continues to evolve in leaps and bounds, many believe that it will likely remain a top-performing investment trend in the years ahead. As this decade’s technological breakthroughs have become an integral part of modern business operations, companies leading the change to digital transformation are poised to be the winners in the 2020s.
What do you think of the 2010s? Was it a good or a bad decade for the global financial markets? How did it go for your own investment portfolio?
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