They were public darlings and household names. Their corporate profits soared over the previous ten years. They were “can’t miss” stocks that thumped the S&P 500 by 143 percent. Plenty of people thought they should have seen that coming. When looking back, it seemed so obvious. And they became the ten biggest stocks in the United States.
I’m not talking, however, about today’s biggest stocks. I’m talking about the market-cap leaders in 2006. If you went back in time to 2006, they would have been all the rage. After all, they crushed the market over the previous ten years. They were market leaders that (in the eyes of many) were destined to keep winning. But something went wrong. If you invested equal amounts in those top ten stocks in 2006, Vanguard’s Total Stock Market Index (VTSMX) would have beaten them by a total of 56 percent over the decade that followed.