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SmartMoney Senior Markets Editor Russell Pearlman on his new piece on "Dead Stocks Walking."
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-- stocks are surging today for at thirty of the biggest names in the S&P 100 index the last decade has essentially left and dead.
But shares trading lower than they did back in 2000 and in one.
Smart money magazine senior markets editor Russell Pearlman brakes and down and a new piece called dead stocks walking He joins me now -- I read this -- it was.
-- it was fabulous it was fascinating fabulous.
Because most of -- where -- -- invested in big mutual funds or even just individual stocks have most of these stocks in our portfolios.
Late did not press and what's that the threat under the theme that can you need amongst all of them.
That's right these thirty folks out of the hundred largest companies are not fly by -- -- of the dells -- Cisco's.
The Microsoft's even get away from tech.
The Ford's Merck's Time Warner is Wal-Mart.
All these are kind of Staples these were huge great companies and stocks in the ninety's and -- -- except a lot of these are still very.
Good companies that are very profitable and yet their stocks have gone nowhere fact that a lot of them have gone.
Down over the past decade.
What was really -- thing as I was reporting this piece was it's one thing for individual investors to kind of by.
These stocks and hold them for a long time alone kind of somewhat -- at -- re right.
But there were so many professionals who did the exact same thing is -- mutual funds have held large positions of these stocks.
For decades and they've really been a drag on returns.
It is sometimes saying -- -- the hardest thing to do an -- you know from you when I was reading this analysts felt comforted by the -- by the fact that some of the bigger money managers and guys are paid to do that.
Don't always know when to pull the trigger as well so what we learn from this analysis because you point out name -- -- Intel -- Microsoft.
Microsoft I mean Stuart -- talked about Microsoft every single day on his program -- clearly is -- a poster child for a guy who won't let that one go.
Haven't we know when to -- ago I think.
One of the easy things is to to look at your own portfolio for works -- if you own a bunch of mutual funds that specialize in large.
Large size stocks like the Microsoft's and Intel's the -- You probably don't need to own them on your own separately because you you're already kind of exposed to -- that's one way.
To kind of get rid of kind of these larger debt stocks walking and others -- the look at yourself.
And look at the sponsors you are at their profits still growing in a lot of cases these companies as I said.
Cisco's triple its earnings over the past decade -- -- engines quadrupled its earnings yet.
The stock hasn't moved where it's gone down so perhaps maybe there is something the market doesn't know.
About these companies and those those -- the -- you might be willing to hold on to.
-- -- you -- a great example of Wal-Mart the stock has gone virtually nowhere but the profits in the same amount of time and last decade are up 200%.
Amgen.
Profits have tripled and the stock really not moving compared and the rest of the S&P which is up 60%.
So there is a big divide between actual performance and we're actually heading into the earnings seasons to -- today tomorrow.
So what can we learn from all of this and not get.
-- -- But profitable earnings reports and and and now reading into them that they're gonna move the stock price well you're right.
It's certainly it's it's it's not a case of in in these large stock cases that.
A corporate earnings don't always necessarily move the stock forward it's just the market does play favorites and least over the past.
-- people talked about all past 23 years market has appreciated large stocks will now.
Really hasn't appreciated large stock since 2001.
And who knows -- what how is that cycle.
Ever going to break because you look out -- most of these companies that we list that -- the thirty we talked about they'll look pretty decent profit profitable third quarters or whatever there.
Last quarterly system was.
But it's gonna take some amazing feat for a large cap stocks and these thirty particular to move -- depositary.
Russell is this a case against holding the most widely held largest stocks out there is this -- case are rallying call to get into it.
Mid -- companies and even individual plays that are off the beaten path is.
Certainly an argument to not put all your money in any asset class in particular you look at -- Leo it's.
It's been no secret that large stocks haven't been particularly good for a while.
But here -- even reinforces that even more than you really need to divide your money out whether it's into.
Midsize stocks real estate commodities in all different types of things so in case you haven't -- and what they.
Small stocks are rewarded for the next decade you jump in -- -- -- now because they've had a tremendous past ten years.
If they're not if they don't get paid off the next ten years you just traded one mistake for another.
Hedging about that's right and it's called are a Russell Pearlman thank you and then -- issues smart money is on -- tomorrow you last check out this great piece you wrote.
And that's not.
