IEEE Spectrum: High-Tech Companies Are Low-Grade Investments
"In an analysis for IEEE Spectrum, Kevin J. Murphy of the Marshall School of Business at the University of Southern California ran a simple algorithm that 'invested' US $100 in the top 1500 companies listed in Standard & Poor's in early 2002—after the dot-com crash wreaked its havoc. And, assuming the investor reinvested all the stock's dividends, Murphy tracked the portfolio's value through the end of 2009, for the 1065 companies that were still listed.
Tech performed abysmally. Of the 118 tech stocks, 79 of them didn't even beat inflation. Just picking the first 118 stocks in alphabetical order beats the tech index by 25 percent. By comparison, the 110 mining and utilities companies on Murphy's index had an average return of $285 on the $100 investment, outperforming tech's $138 return by more than two to one."
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