With S&P 500 at Record Level, USA Today Writer Focuses on the Index's Losers

June 4th, 2007 10:21 AM

While the relatively narrow Dow Jones Industrial Average has been achieving alltime highs for a couple of months, it took until last week for the broader S&P 500 index to beat its previous record of 1527. The index closed at 1536.24 last week.

Instead of writing up the big winners in the 77% of companies that have brought the index back from its 2000 low, USA Today writer Matt Krantz looked for dark clouds in on otherwise blue sky, taking an opportunity to focus on the index's losers who kept the index's recovery of value from happening sooner:

S&P's run leaves Wal-Mart, other big caps behind

For a quarter of the stock market, the celebration about the Standard & Poor's 500's charge back to record levels for the first time in more than seven years is an example of history being written by the victors.

Even though the benchmark S&P index last week finally took out its old high from March 2000, investors who own 23% of its stocks have completely missed out. A total of 115 stocks in the S&P 500-stock index are still below where they were in March 2000, according to data from Bridge Information and S&P. They aren't down just a little, either, but off 45% on average.

"At any given time, you're going to have companies that have one-off issues," says James Paulsen of Wells Capital Management.

Yeah guys, and that's why investing in a broad-based index of stocks in an index mutual fund is often a good idea for investors who don't have the time to evaluate and keep up with either individual stocks or actively-managed mutual funds. Zheesh.

Krantz also noted that the tech-heavy NASDAQ, which by all accounts was immensely overinflated during its run to over 5000 that ended in 2000 (and certainly affected how long it took the S&P to recover), would have to gain 93% to get to its alltime high.

If you don't remember a lot of stories about companies left behind during the stock runup of the 1990s, join the club.

Cross-posted at BizzyBlog.com.