After a Parabolic Rise During the Late 1990s, the “Four Horsemen” Went Nowhere For A Decade
During the late 1990s as the internet was becoming anincreasingly more integral part of our everyday lives, Cisco Systems (CSCO),Intel (INTC), Microsoft (MSFT) and Oracle (ORCL) played important roles. They became known as the “four horsemen” for theiroutsized influence on the stock market as a result of their technological innovation,market capitalization and market penetration. This is not unlike today’s “Magnificent Seven” which is comprised ofleaders Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META),Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA).
As the graph below illustrates, the share price gainsthat investors in the Four Horsemen reaped during the parabolic move during the1990s reversed itself shortly after the turn of the millennium beforeflat-lining for the remainder of the decade as a result of having risen tounsustainable levels regardless of their still stellar business fundamentals.
Although we see parallels between the Magnificent Sevenand the Four Horsemen in part due to the excitement over the potential ofArtificial Intelligence (AI) similar to that of the internet twenty-plus yearsago, over the intermediate- to long-term we believe valuations are reasonableand to date, there has been no parabolic move. That said, for proper portfolio construction it is important to remaindiversified over several different industries.
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