• Shift from intellectual to land-based sources of economic growth. In a May 2001 interview, I speculated that with a former oil executive as president, land-based industries such as coal and oil would benefit while information technology spending by business looked to be in trouble. The attacks accelerated this shift by introducing political risk into oil producing regions and adding a terror premium to oil prices;
• Tax cuts for the top 1%. In June 2001, $1.6 trillion worth of tax cuts were passed into law -- as the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) -- 36.7% of those cuts went to the top 1% of families as ranked by earnings. Bolstered by an additional $400 billion in tax cuts passed in May 2003, they helped spur a shift of wealth into hedge funds and private equity and also contributed to a rise in high-end real estate;
• Interest rate reduction. In January 2001, the Federal Reserve began a series of interest rate cuts -- with a 50 basis point reduction in the Fed Funds rate -- to 6% -- which eventually led to a low of 1% in June 2003. These interest rate cuts helped spur the rise of the housing industry which enabled consumers to use their home equity as an ATM -- in 2005 withdrawing $800 billion in home equity value -- to cover their rising cost of living -- reflected in a negative savings rate of -0.5%. They also made it cheaper to finance leveraged buyouts; and
• Global integration. The forces of globalization have been underway for decades; however they accelerated in the 1990s due to lower telecommunications costs and the popularity of the Internet. Since 9/11 global integration has accelerated, despite the attack on airlines and the World Trade Center, with a rise in demand for US raw materials -- such as coal, steel, and oil -- from developing countries such as China and India and wider US corporate adoption of outsourcing.

9/11 did introduce one important new economic force -- an increase in defense spending. Specifically, the 2001 defense budget was $305 billion and for fiscal 2007 it had increased 53% to $468 billion -- a figure which excludes $50 billion in supplemental appropriations for Iraq and Afghanistan. This economic force helped out stocks in the defense industry -- for example, between January 2001 and June 2006, defense stocks I track rose an average of 114%.

With these trends in place, an investor would expect stock price jumps in industries such as energy, raw materials, housing, and defense and a decline in technology. An analysis of the actual performance of Dow Jones Industry indices over the last five years reveals two surprises -- a rise in stocks of consumer electronics and gambling companies -- but mostly confirms these expectations.

According to the Dow Jones US Industry Sectors [subscription required] over the last five years, the top 10 performing US industry sectors tracked by Dow Jones were as follows:

• General mining +860%
• Consumer electronics +389%
• Non-ferrous metals +290%
• Exploration and production +208%
• Steel +205%
• Coal +204%
• Gambling +173%
• Home construction +150%
• Commercial vehicles and trucks +140%
• Oil equipment and services: +138%

(I also would have expected defense stocks to be up more, however, the Dow Jones' defense stock index kicked off at the beginning of 2005 so five years of comparable data were not available.)

By contrast, some of the worst hit sectors over the last five years include automobiles (-40%), airlines (-39%) and fixed line telecommunications (-21%). Autos have been hurt by US car-makers' inability to switch strategy from gas guzzling SUVs to more fuel efficient vehicles; many airlines have lowered their labor costs after emerging from bankruptcy but are still hurting from high jet fuel and other costs; and the telecom companies still suffer from the overcapacity, competition and excessive borrowing that began in the late 1990s.

In the next five years, home construction is likely to take a hit as high levels of consumer debt and nasty upward spikes in adjustable rate mortgage payments put the brakes on housing. It remains to be seen whether housing-related stocks already reflect this well-publicized bad news. On the plus side, one of the top performers in the consumer electronics index, Garmin Ltd. (NASDAQ: GRMN), a maker of global positioning systems for consumers, might be worth further analysis.

Looking back on that dark day what I find most striking is that 9/11 didn't change much from an economic and stock market perspective. Most of the trends underway before the attacks have continued in their wake.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He has no financial interest in Garmin.