Con­grats, Al­pha­bet! But don't get too ex­cited

The Pak Banker - - OPINION - Justin Fox

IT hap­pened for real this morn­ing, af­ter sort of hap­pen­ing in af­ter-hours trad­ing Mon­day night: Al­pha­bet, the bud­ding con­glom­er­ate for­merly known as Google, passed Ap­ple to be­come the world's most valu­able com­pany, as mea­sured by stock-mar­ket cap­i­tal­iza­tion. At the close of trad­ing, the mar­ket caps were $531 bil­lion for Al­pha­bet and $524 bil­lion for Ap­ple. Con­grats, Larry and Sergey! As chang­ings-of-the guard go, this one doesn't feel all that epochal. Ap­ple has been be­hind Google be­fore -- the last time was six years ago, when nei­ther was in the top spot -- and it could con­ceiv­ably jump ahead of it again soon, given how much more volatile its stock price has been. The big­ger news may ac­tu­ally be that Face­book passed Berk­shire Hath­away and Exxon Mo­bil on Mon­day and broke into the mar­ket-cap top five for the first time. Here are the mar­ket-cap lead­ers as of to­day, with the tra­jec­to­ries that brought them there.

In other words, th­ese are the five com­pa­nies that stock-mar­ket in­vestors deem to have the most valu­able com­bi­na­tion of present earn­ings and fu­ture prospects. Which got me think­ing: How good have in­vestors been at as­sess­ing the most valu­able cor­po­ra­tions' prospects in the past? Here's how things have worked out for the com­pa­nies that led the list a decade ago: Oil was hot then (Royal Dutch Shell was No. 6), and now it's not. But it pre­sum­ably will be again. As for Gen­eral Elec­tric and Cit­i­group, what in­vestors didn't get in 2006 was that the worst global fi­nan­cial cri­sis in 75 years was com­ing, and it would be es­pe­cially tough on banks such as Citi and bank-like en­ti­ties such as GE Cap­i­tal. I was also cu­ri­ous how the top five from March 2000 -- the apex of the tech-stock boom -- had done.

Re­mem­ber NTT Docomo? It's still Ja­pan's big­gest wire­less op­er­a­tor. But in 2000 it was widely seen as the fu­ture of mo­bile. Its i-mode ser­vice, launched in 1999, was the first truly suc­cess­ful ef­fort to bring the In­ter­net to mo­bile phones. Some of its in­no­va­tions (emoji!) are still with us to­day, but it was Ap­ple and Google that ended up mak­ing the mo­bile In­ter­net ubiq­ui­tous, not NTT Docomo. NTT Docomo has had the steep­est fall, but Cisco and In­tel weren't far be­hind. Only Mi­crosoft has come close to mak­ing up its losses since March 2000. That was a time of unique in­vestor over­con­fi­dence, but all of the 2006 top five ex­cept Mi­crosoft are worth less now than they were a decade ago, too. Mean­while, the Stan­dard & Poor's 500 In­dex is up 50 per­cent since Fe­bru­ary 2006, and it's up 25 per­cent since March 2000.

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