American International Group Inc (AIG), E TRADE Financial Corporation (ETFC): The S&P’s Hardest-Fought Milestone in 28 Years

Yesterday, the S&P 500 (S&P Indices:.INX) climbed above the 1,600 mark for the first time, setting the latest in a series of recent all-time record highs. But the most surprising thing about the market’s move on Friday is just how long it took to get there.

It took more than 13 years for the S&P to go from 1,500 to 1,600. That’s a move of less than 7%, yet it’s the longest that the S&P has taken to make a 100-point move since 1985. During those 13 years, two huge bear markets got in the way of stocks’ progress, and a changing of the guard led to great disparities in performance among S&P 500 stocks. Let’s take a look back at market history to see just how psychologically important breaching the 1,600 mark may prove to be.

Counting by hundreds
Back in the 1990s, jumping by 100-point intervals seemed like child’s play. It took the S&P from 1968 to 1985 to go from 100 to 200, but given that the market had to double to reach that new benchmark, it’s easy to understand why it took so long for stocks to jump that high. The market’s bull run led it to 300 by early 1987, and even the market’s crash later that year didn’t stop it from hitting 400 by late 1991.

From there, stocks truly exploded higher, setting new 100-point milestones several times each year. In less than five years, the S&P went from 500 to 1,500, on the back of big technology stocks that soared many times the overall return of the market.

Yet after that, investors are quite familiar with what happened next. The tech bust sent stocks crashing back to earth, and even after fully rebounding by late 2007, the financial crisis reared its head and sent stocks staggering once more. Only after a magnificent bounce from 2009’s lows has the S&P 500 finally gotten past the 1,600 barrier once and for all.

Which stocks got us here?
Yet the path to 1,600 has been littered with poor-performing S&P components. Financial stocks are the obvious victims, with American International Group Inc (NYSE:AIG) and E TRADE Financial Corporation (NASDAQ:ETFC) near the bottom of the list from a return standpoint. You’ll also find several technology companies with losses of 75% or more over the past 13 years, demonstrating the failure of many once-ascendant young prospects to reach anything close to their full potential.