Stocks With Room to Runhttp://www.fool.com/investing/small-cap/2009/02/23/stocks-with-room-to-run.aspx Todd Wenning
February 23, 2009
The "Rule of 72" is a great way to calculate compounding interest in your head. To find the number of years it would take a figure to double, simply divide the number 72 by the assumed growth rate. For example, if you think your stock will grow at a rate of 7.2% per year, it will take roughly 10 years for it to double (72 / 7.2 = 10).
If that 7.2% long-term equity growth rate seems too slow, consider that the Vanguard Total Bond Market Index (VBMFX) returned about 5.4% per year on average over the past 10 years, while the S&P 500 has had an annualized return of negative 3.1% over that same time period.
It's been a disappointing decade, to be sure, and many notable companies not only underperformed the bond market, but also posted negative 10-year returns.
Of the 500 companies currently in the S&P 500, 187 -- about 37% -- have failed to break even since February 1999. Some of those dreary investments include:
Makes you want to take a closer look at your index fund, doesn't it?
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