The Industrial Revolution was a time of innovation for the development and manufacturing efficiency of products. As such, old economy stocks were the market’s top leaders, growing throughout the years to build out the foundations of the industrial and manufactured goods sectors. Within these sectors, investors will now find large, mature, well-established businesses with consistent growth and relatively steady fundamental characteristics.
Some of the most notable old economy stocks include names like Ford (F), Caterpillar (CAT), 3M (MMM) and Procter & Gamble (PG). These old economy companies’ business activities dominated the economic landscape before the dotcom era of the late 1990s ushered in an entire industry of new, high-growth companies. Old economy stocks have sustained business activities through many market cycles. While they continue to innovate within their market segments, overall they participate in traditional business activities with relatively minimal investment or involvement in leading new era technologies.
Many investors equate old economy stocks with the term blue chip. Old economy stocks are also typically classified in the value category which is known for relatively low volatility, stable earnings, consistent returns, dividends for income, and steady streams of cash flow.