>>On the other hand, there are people who held INTC, CSCO, KO, PEP, MSFT, etc. since 2000 and still have zero cap gain twelve years later...<<
Not quite true. PEP traded in 2000 around 30-35$. KO was expensive but even that stock would be bought in Y2000 around 45$ if you were looking for a good entry point.
PEP is currently trading for 68$ and for KO 67$.. From appreciation alone, PEP investors would have a return of about 7% annualy (calculating from the 32.5$ midpoint), plus probably 2% from dividends. KO was very expensive in Y2000, but if you bought close to the low in Y2000 at 45$, your annual return would have been 4% (plus a little from dividends).
Those are not great returns but they beat putting the money under the mattress. the growth did in fact bail out the investors of these great companies. Of course even though those stocks were overvalued in Y2000, they were not as overvalued as CSCO in Y2000 and many others, trading at PE's of 50x+. The Momo investors in new crop of bubble stocks like OPEN, CRM, CMG and LKND will probably learn this lesson anew. |
