Five years is a long time to wait to make no money on a stock. But that's been the case for a surprisingly large part of the S&P 500 — explaining why so many investors are fed up and willing to dump stocks for 5% CDs.
More than a quarter of the stocks currently in the S&P 500, including VF, DXC Technology and Carnival, are lower now than they were five years ago, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Even widely held stocks in the Dow Jones Industrial Average like Walt Disney are down nearly 27% over the past five years.
Seeing so many big dead money stocks might come as a surprise, as the value of the S&P 500 itself is up 55.2% over the past five years. But the fact is, you've had a one-in-four chance of picking a loser over a winner. Choosing wrong leaves you not just behind the market, but with less money than you started with.
"Hope springs eternal," said Robert Maltbie, fund manager of Argonaut 2000 Partners. Just a handful drove the S&P 500 for years, he says.
One-In-Four Shot Of Losing Money In Five Years
If you just look at the S&P 500 itself, the past five years look solid. But digging down to the individual stock level tells a different story.
For the entire S&P 500 and including dividends, investors scored total returns of more than 69% for the past five years ended in August, says Howard Silverblatt of S&P Dow Jones Indices. And it's not just the S&P 500 gaining. The Dow returned 49% and small caps nearly 21%. Market returns from that angle look great.
But this return is almost entirely due to a 135% total return of large technology stocks in that time. Just 10 stocks account for roughly a third of the S&P 500's value. Once you look beyond Big Tech, you start to see why losing money is so easy.
More than 125 stocks in the S&P 500 are lower now than they were five years ago. And some of those were major wipeouts. Of those, more than 40% are down 25% or more.
Biggest Five-Year Disaster: VF
VF, an apparel maker of brands like The North Face, Timberland and JanSport, is known for helping customers scale heights. But its stock has only known one direction in the past five years: down.
Shares of the consumer discretionary stocks are trading for 56% less now than they were five years ago. Even the 9.2% yield can't cover up what's been a huge disappointment. And it's not just investors distorting prices. The company's fundamentals are also shriveling up. The company in fiscal 2023 earned just $2.10 a share, down more than 44% from five years ago.
Lots Of Ways To Lose Money
Some S&P 500 stocks are down so much, even powerful bounces this year can't patch up the damage.
Case in point is Carnival. Shares of the cruise line operator are up 96% just this year so far. Bookings for cruises are up sharply as fewer people worry about Covid-19. But even after doubling in value this year, shares of Carnival are still down 74% from five years ago.
Investors, though, continue to hold on. Carnival continues to be a widely held stock with investors of all ages. Investors seem to be waiting for the company to return to profitability as expected in fiscal 2024.
Hopefully the next five years will be better for investors than the past five.
'Dead Money' S&P 500 Stocks
Stocks down the most in the past five years
| Company | Ticker | 5-year ch. | Sector |
|---|---|---|---|
| VF Corp. | -77.8% | Consumer Discretionary | |
| DXC Technology | -76.8 | Information Technology | |
| Carnival | -74.4 | Consumer Discretionary | |
| Paramount Global | -74.3 | Communication Services | |
| Viatris | -72.4 | Health Care | |
| Norwegian Cruise Line | -69.4 | Consumer Discretionary | |
| Walgreens Boots Alliance | -65.8 | Consumer Staples | |
| PG&E | -64.4 | Utilities | |
| American Airlines | -63.7 | Industrials | |
| DuPont de Nemours | -62.9 | Materials |
