![]() ![]() The only two companies to remain in the top 10 since 2010 are Microsoft and Apple. Today, we are all aware of the remarkable domination of global capital markets by US and Chinese growth stocks. ![]() In the 2000s, the rise of the technology and communications industries paved the way to entry in the top 10 for Chinese firms a decade later. ![]() In 1990, Japanese conglomerates were the titans. None of the 10 largest stocks by market-cap, which would have dominated a global market-cap index, in 1980 or 1990 are in the top 10 in 2021. From the vantage point of their being a top 10 stock, it seems outlandish they would ever fall out of the top 10 position, but history bears witness that this is in fact the case.Ī comparison of the top-dog stocks at the beginning of the first year of each decade, beginning in 1980, shows the dramatic shift in the top 10 companies over time. Often forgotten, however, is that the top 10 stocks can also have significant turnover from decade to decade. These companies can hold that esteemed position for an extended period of time, sometimes decades. Arnott, Kalesnik, and Wu (2018) updated earlier research by our firm on what we call the global top-dog stocks, the top 10 stocks in the world by market-cap. The companies that dominate a global market-cap index are, by definition, those with the largest market capitalizations. Investing in a more-diversified strategy, such as a smart beta multi-factor index, can improve diversification, not only across companies, but across investment styles. Investing in these stocks, particularly via a highly concentrated market-cap index, can mean underperformance for investors over time. Not only the Greek gods, but the rulers of the equity market, the largest market-cap stocks in a market-cap index, repeatedly fall from grace. Against all odds, even the most powerful can fail. True of all great stories, this story teaches us an important lesson: never underestimate how drastically the playing field can change, even in the most unlikely of circumstances. Hollywood has always found a plethora of screenplay material in Greek mythology, spotlighting gods and demigods, catapulting them and the actors who play them into stardom, back when big screens were a thing! Titanomachy is one of the most defining moments in Greek mythology: a great battle between two generation of gods-the older Titans and the younger Olympians. Greek mythology, replete with tales of gods, intense battles, and mystical powers, is captivating. ![]()
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