4 years after the stock market bottom, the biggest winnersMarch 8, 2013: 9:03 AM ET
Stocks have added $11.3 trillion in value, or 138%, since the market bottomed four years ago. That's an annual compounded return of more than 26%.
FORTUNE -- It's so much fun to own stocks these days, with the Dow Industrials and Wilshire 5000 index setting one new high after another, and the Standard & Poor's 500 within 1% of doing the same. Watching the value of your portfolio rise is such a delightful indoor sport.
All this happiness and moneymaking (if only on paper) are what make Saturday's anniversary so interesting and educational. What anniversary, you ask? Why, the fourth anniversary of the market bottom, reached by all three of the major indicators on Mar. 9, 2009. You remember those days, don't you? It was a hideous time, with people losing their jobs, house prices collapsing, the world financial system teetering on the brink, and the U.S. stock market, as measured by the Wilshire, down a sickening 57% -- or $11.2 trillion—from its high 17 months earlier.
Why bother studying a market bottom when stocks are roaring upward? Because you make your real money in the stock market not by buying when shares are hitting highs and everyone wants them, but by buying when they're down and holding on to them until everyone wants them. The trick, of course, is to have the staying power and self-confidence in case what looks like a cheap market gets even cheaper.
Stocks rose $11.3 trillion in value -- that's 138% -- from the bottom through Thursday's close, according to Wilshire. That has more than made up for the market losses that helped traumatize the economy during the financial crisis. The annual return is a bit over 26%, compounded.
Stocks may well continue to rise -- I certainly hope they do, because they make up the bulk of my net worth. But there's no way that the market as a whole can continue rising at anything like its recent rate for any sort of extended period. For the market to rise at 26%, compounded, for another three years, the Dow has to reach 29,000 in 2016, and the S&P, 3,100. That's just not going to happen, unless the laws of arithmetic are repealed.
However, when it comes to individual stocks, all things are possible -- in both the up and down direction. That's another lesson that we can take from the upcoming anniversary.
Let's go to the High Five list -- the five most valuable U.S. stocks the day the market bottomed, according to Wilshire's stats, and the top five as of the close of business Wednesday. ExxonMobil (XOM) was No. 1 on both dates, with market values of $328 billion at the bottom and $408 billion at the top. But the four other stocks were entirely different.
Apple (AAPL), No. 17 at the market bottom with a stock value of $74 billion, was No. 2 as of Wednesday, at $400 billion. It was followed by Google (GOOG) (No. 11 at the bottom), Berkshire Hathaway (BRKA) (No. 9) and General Electric (GE) (No. 16). The market values of both Google and GE have tripled, and Berkshire's has more than doubled, aided by the new shares it issued to complete its purchase of Burlington Northern.
At the market bottom, Wal-Mart (WMT) ranked second behind ExxonMobil, followed by Microsoft (MSFT), Procter & Gamble (PG) and Johnson & Johnson (JNJ). All of these are household names, and all of have risen, with changes ranging from 30% for Wal-Mart to 75% for Microsoft. But they haven't risen quickly enough to keep their High Five status. Apple and Google displace Microsoft, despite a 75% jump -- who'da thunkit? Certainly, not me.
The bottom line: If you're one of the stock market winners, spend a little time Saturday thinking about how fortunate those of us who own stocks have been for the past four years, thanks in substantial part to the government propping the economy and keeping interest rates ultra-low. But please remember that a great four-year stock market doesn't mean we have anything resembling a great economy. And also remember that although stocks have risen 26% a year, there are still plenty of people in plenty in this country who still have plenty of trouble.