Past '$500 Billion Club' Members: Where Are They Now?

by: Anthony Welch

As Apple (NASDAQ:AAPL) joins the exclusive $500 Billion market Cap Club, I thought it might be interesting to look at the other members to see what has happened since they hit their peak.

According to this morning's article on Baron's Tech Trader Daily page, here are the dates and market caps of the other members. I calculated the results since then:

Cisco (NASDAQ:CSCO) hit its peak of $538 billion in March of 2000. Today, with a market cap of $108 billion, the company has lost 80% of its value over the past 12 years.

Intel (NASDAQ:INTC) barely made it at $503 billion in August of 2000 and currently carries a $135 billion market cap - a loss of 73%.

General Electric (NYSE:GE) climbed up to $581 billion, also in August of 2000, (ah, those were the days), and is now at $203 billion, suffering a loss of 65%.

Microsoft (NASDAQ:MSFT) became the only member of the $600 billion club in December of 1999 and is now at $268 billion. At only a 56% loss, Microsoft shines in comparison.

Exxon (NYSE:XOM) was the most recent addition in July 2009 at $513 billion and at a current $411 billion has only dropped 20% in market cap.

Does that mean everyone should sell their Apple right now? Of course not. Number one, suggesting that is the best way to get more flames than the back of a rocket, and I certainly don't want that! Secondly, the stocks of the 1990's bubble were very overvalued. It was indeed a bubble where stocks that are now trading at less than 10 times forward earnings were at 50-80 times forward P/E or more. Apple has a forward multiple of 11.5 - hardly in the bubble range. The PEG ratio, P/E divided by growth rate, is estimated at a paltry 0.65 for the next five years. That's the type of number value investors look for.

I could go on discussing why Apple is different, but many others have already done so on Seeking Alpha, so let me just say that I am an Apple convert and have gone from owning zero products a couple of years ago to many today. And, yes, maybe I'm a little bitter that I've missed some of this recent leg up, having sold last week, but I wish nothing but the best for the company and shareholders. That being said, based on the results from the other members of the 500 club, I just want to point out that bad things can and do happen to stocks, especially ones that are universally loved.

The moral of the story is not to love stocks. You own them for one reason - to make money. Apple is likely to make plenty of money for their shareholders for some time and may very well make it to a trillion and beyond, but that's why surprises are surprises - because they're unexpected. I was there in the 1990's, and few people thought Cisco could ever drop 80% or more. By all means, hold on to your stock, just don't fall in love with it. History is repeated in the stock market more often than not.

Disclosure: I am long GE, INTC.