Skip to Content
Rekenthaler Report

The Biggest Companies Have Deserved to Be Best

Their business results have driven their stock-market gains.

Mentioned: , , , , , ,

Two Tiers
Tuesday's column detailed how, in recent years, blue chips have dominated. An investor in August 2013 who sorted all publicly traded firms by their market caps from largest to smallest, selected the top 1%, invested equally in each of those 67 stocks, and then held that portfolio would have gained an annualized 13% over the next five years. In contrast, someone who employed the same tactic for the remaining 99% wouldn't have made a penny.

The latter finding isn't completely surprising. As I once wrote, most stocks stink--not just for five years, but forever. Half of all issues contained in the Center for Research in Security Prices' U.S. stock-market database, which dates to 1926, have posted negative returns for their lifetimes. Thus, the tactic of investing equally across the market's smaller 99% only succeeds if the winners are so huge as to overcome the majority's drag. Sometimes, that occurs--but not in this case, for the hypothetical buy-and-hold August 2013 investor.

John Rekenthaler does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.