 |
 |
|
| |
How Did You Do?
Total up your picks to see how well you did. Value as of December 31, 2004. Source: Towers Data Systems. |
|
|
Market Value (excluding dividends)
 |
Altria Group |
- 5,873,241 |
|
Procter & Gamble |
- 5,467,967 |
|
General Electric |
- 5,390,774 |
|
Exxon Mobil |
- 2,552,276 |
|
Coca-Cola |
- 1,241,417 |
|
Citigroup |
- 1,178,205 |
|
Alcoa |
- 927,826 |
|
Merck |
- 800,778 |
|
Hewlett-Packard |
- 731,880 |
|
Home Depot |
- 714,315 |
|
Intel |
- 681,460 |
|
McDonald |
- 580,395 |
|
DuPont |
- 501,627 |
|
United Technologies |
- 460,772 |
|
Pfizer |
- 431,345 |
|
SBC Communications |
- 313,944 |
|
Microsoft |
- 313,413 |
|
3M |
- 259,557 |
|
Wal-Mart Stores |
- 230,931 |
|
General Motors |
- 180,847 |
|
Disney |
- 171,366 |
|
Boeing |
- 154,273 |
|
American Express |
- 152,479 |
|
Honeywell International |
- 145,441 |
|
American International Group |
- 91,422 |
|
JPMorgan Chase & Co. |
- 86,702 |
|
IBM |
- 75,140 |
|
Johnson & Johnson |
- 60,418 |
|
Caterpillar |
- 42,206 |
|
Verizon Communications |
- 29,479 |
*It was assumed that the entire $10,000 was invested in each stock and that fractional shares were purchased where required to use up the full amount. No brokerage charges were included in the cost. Adjustments were made for all stock splits and stock dividends.
Market value (excluding dividends)
The process of replacing stocks in the Dow would have often meant selling low (when a stock was being removed from the Dow) and buying high (when its replacement was being added to the Dow).
The Best vs. The Worst
If you managed to pick the five best performers (Altria, Proctor & Gamble, General Electric, Exxon Mobil and Coca-Cola) your $50,000 would have grown to a combined $20,525,675 for an average annual return of 8.85%. Now it's important to remember that this doesn't include dividends. If dividends were reinvested in more shares of stock the returns would have been much higher.
What if you unfortunately picked the bottom five stocks? (JP Morgan Chase & Co., IBM, Johnson & Johnson, Caterpillar and Verizon Communications) Well if you had your total combined value would have grown to $284,945 for an average annual return of about 2.5%.
Interesting Side Note: As you can see the odds of picking the best stocks over time are challenging at best. Could there be a easier, simpler way to do it? Maybe. There were a number of mutual funds in existence back in 1934 and at least one of them did better than the best stock in the Dow Jones. In fact, if the whole $50,000 had been invested in this fund back then, it would have averaged about 25% more than the five best performing stocks in the Dow (excluding dividends).
Now past performance is no guarantee of future results, and some of the mutual funds that were around back then didn't do nearly as well, but it is a fact that some investment managers have consistently performed better than the market averages. And that's after deducting their fees. Food for thought. |
| |
|
|
 |
|
