This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

If Big Stocks Let You Down, Think Small

BOSTON ( TheStreet) -- For a very long time, many retirement portfolios have focused on big, well-known companies such as GE (GE - Get Report) and IBM (IBM - Get Report). Owning big blue-chip stocks has been seen as safe and profitable.

But in the topsy-turvy marketplace of recent years, this conventional wisdom doesn't always ring true. Some less prestigious companies and small-cap stocks can also boost returns, hedge against inflation and build the savings needed for longer lives.

Google is a great company but a lousy investment, some say.

"Some of America's biggest and most well-known companies are hurting lots of portfolios," says Bill Gunderson, president of Gunderson Capital Management and host of a daily radio show on KCEO-AM in Oceanside, Calif. "Not only do they drag your portfolio down -- many of them have gone backwards for years."

"There are stocks of yesteryear, and there are stocks for today," he says. "Take Cisco (CSCO - Get Report), for example. Over the last 10 years it has gone nowhere; over the past three years it has given negative returns. It became a stock of yesteryear five or six years ago."

Other "stocks of yesteryear," in his opinion, are Google (GOOG), Pfizer (PFE - Get Report), Microsoft (MSFT - Get Report) and Intel (INTC - Get Report).

"Great companies all, but lousy as investments," Gunderson says.

Many investors look at these recognizable names as though "there is a warm blanket being wrapped around them," he says, but favorable associations are not enough; one has to dig into their actual track record.

Many mutual funds, a core holding of 401(k) plans, tend to load up on such companies, which can be bad news for those saving for retirement, Gunderson says.

"General Electric is probably one of the most widely held, well known stocks in the world," he says. "If you look at GE over the last 10 years, it is down about 60% during that period of time. On the other hand, during that same time, you have a stock like Priceline (PCLN) that is up 600%."

Instead of riding on the past glory of Microsoft, Gunderson prefers up-and-coming companies such as AutoZone (AZO - Get Report) and Dollar Tree (DLTR - Get Report) to build returns and provide diversification.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AZO $681.34 0.00%
CAT $79.67 0.00%
CSCO $27.13 0.00%
DLTR $81.72 0.00%
GOOG $548.34 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs