The stock market is back to new highs, but has your portfolio recovered?
Scores of widely held stocks have never been the same since the bubble burst in 2001. Many of these companies changed the world. And now that the world has changed?
Well, let’s just say that no one expects General Electric, Microsoft, Pfizer or Wal-Mart to change it again.
“So many people have given up on these stocks,” said Chris Hughen, a finance professor at the University of Denver’s Daniels College of Business. “It’s a mystery as to when they will come back.”
As the Dow hovers near all-time highs, broader indexes lag, including the S&P 500 and the Nasdaq. Economic data give plenty of fodder to optimists and pessimists alike. It’s been a classic struggle between the bulls and the bears, but we’ve also had plenty of dogs. For example:
Wal-Mart stock peaked at nearly $70 in December 1999. Then, it was still a fast-growing challenger. Today, it’s the world’s largest retailer, and Sears and Kmart are hobbled has-beens. So where’s Wal-Mart’s stock price now? It closed Monday at $46, down 34 percent from seven years ago.
Wal-Mart has matured. It isn’t growing as rapidly as it did in the 1990s. The premium that investors once paid for growth is gone. It’s tempting to hope for a comeback. But it’s a mistake to get stuck on a name – even a household name, said John Claxton of RBC Dain Rauscher in Denver. “Investors need to be vigilant,” Claxton said. “It may be as simple as taking a look at your own consumer habits and asking, ‘Are you shopping at Wal- Mart as much as you used to?”‘
Or how about asking who is the CEO of General Electric?
GE, with a market value of $363 billion, is virtually an economy unto itself. Its stock hit a high of $60 in August 2000, when celebrity CEO Jack Welch was still at the helm. On Monday, GE stock closed at $35.22, down about 41 percent from its all-time high. (Chances are, you were unable to think of the CEO’s name at GE. It’s some guy named Jeffrey Immelt.)
It used to be said that what’s good for General Motors was good for the country. GM stock peaked at $93.63 in April 2000. It closed Monday at $29.98, down about 68 percent from its all-time high. It turns out that GM has been good for the Dow, though. At the beginning of the year, many observers expected the automaker to go bankrupt. It didn’t, so now its stock is up more than 54 percent year-to-date. If only it could rise another 200 percent, it would be right back near where it was seven years ago.
Pfizer hit its high of more than $50 a share in April 1999. Remember Viagra? It was known as the “Pfizer riser.” Pfizer stock could use more Viagra. It closed Monday at $25.16, down about 50 percent from its high.
Lucent Technologies stock hit nearly $78 a share in December 1999. The telecommunications-equipment maker used to be valued at more than $70 billion on the stock market. Last month, Paris- based Alcatel bought it for $11.6 billion. Imagine that. Conquered by the French.
Like to buy the world a Coke? That’s an ambitious goal if you bought and held Coca-Cola stock, which peaked at nearly $88 and closed Monday at $48.81.
Yahoo peaked at $118.75 in January 2000. It closed Monday at $26.29. Its competitor Google issued stock for the first time in August 2004 at $85 per share. Google closed Monday at $494.
What happened to the mouse that roared? Disney peaked at more than $43 in April 2000. It closed Monday at $34.52.
Microsoft keeps living up to its name. Its stock, which peaked at nearly $60 in December 1999, closed Monday at $29.54.
It took Citigroup – worth $260 billion – six-plus years to go nowhere. Driven by merger mania, the bank’s stock hit nearly $55 in August 2000. It closed Monday at $52.88, proving the maxim that mergers often fail to add value.
“The list goes on and on,” said Fred Taylor of Denver-based Northstar Investment Advisors. “Does it mean that the market was so overvalued in 1999 that it was insane? Or does that mean the market is cheap and has a lot higher to go?”
Stuck with a dog stock? Tell it to the blog, denverpostbloghouse.com/lewis. Al Lewis, whose column appears Tuesdays, Fridays and Saturdays, also can be reached at 303-954-1967 or alewis@denverpost.com.
