This might be what you're looking for. The stats are very interesting. Do you think there are other periods where they did continue to perform? As I mentioned before, I feel I've already seen this happening in the last couple of years in lots of stocks, but not all of them yet.
msnbc.com
Drawbacks of buying and holding
Well-regarded investment strategy may have long-term flaws
By Jane Bryant Quinn
WASHINGTON POST
April 11 Let's say you're holding a lot of SuperCompany's stock. It has been a huge winner, and now it's a major portion of your net worth. It's down with the market but hasn't been smashed. You're reluctant to sell, because you?d owe a big capital gains tax. Besides, it's a superstar company. You have confidence in it.
BUT IN THIS CASE, holding for the long term isn't the best idea. That advice comes from Sanford C. Bernstein & Co., a New York investment firm, and two of its analysts: Alan Feld, managing director of the family wealth group, and Mark Gordon, director of quantitative research.
When you stake your future on a single company's stock, you run the risk that it and you will come to grief.
This can be true even with a big-name global business. Of Fortune magazine's 10 most admired companies in 1988, only one made the list in 1998 (Merck), and it dropped off in 1999.
Four of those stocks outperformed the market over the decade. The other six did so poorly that investors would have been better off if they'd sold in 1988, paid the tax and bought a mutual fund that followed the S&P 500 index.
In recent years, we've worshipped big-growth companies, especially the high techs. But of 34 leading tech stocks back in 1980, only one, Intel emerged a winner. Of the rest, 22 aren't trading anymore; the other 11 have trailed the S&P 500 average; three of the 11 have lost more than half their value.
Investors who held those stocks might have thought they were playing it safe. But in business, a lot can change in a short time, says Feld.
This is especially true of highly volatile stocks. All else being equal, the more volatile the price (meaning that it jumps around), the lower its long-term rate of growth.
FEWER WINNERS IN THE LONG RUN
As an example, the analysts looked at three different stocks, each of them showing the same annual average return over 24 months. Two were volatile, one was steady. The steady stock yielded a higher dollar gain than the two volatile stocks.
That may sound wrong to you, but it?s a mathematical truth. Volatility reduces growth. Single stocks are more volatile than the market as a whole. On average, they won?t perform as well over time.
But naturally, you think you don't own an average stock. You own SuperCompany, one of the best.
But do you remember the dominance of Pan Am (note to younger investors: that was an airline) or Zenith, the electronics powerhouse? They went from brilliant to broke.
Here's another interesting fact: The longer you plan to hold a stock, the greater the risk that it will underperform.
There are many underperforming stocks over the long run. The winners are fewer, with little to distinguish them well in advance. Investors weren?t picking out Intel back in 1980, Gordon says.
You've read again and again that buy and hold is the most prudent course. But that applies to staying in the market as a whole or keeping a well-diversified portfolio. It doesn't apply to any single stock.................
¸ 2000 The Washington Post Company
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