10 Best-Performing Stocks Defy Prediction

(Adds that Target may have Apple shops within its stores.)

BOSTON (TheStreet) -- Mutual fund investors, emotionally whipped by the drumbeat of bad news for the past decade and the losses posted by some of the most respected funds, missed out on big winners.

That's because they pulled an estimated $132 billion from U.S. mutual funds in 2011, the fifth straight year of withdrawals, according to the Investment Company Institute, a trade group that's tracked the industry since 1984. After the dot-com bust of 2000 to 2002, investors again endured a crash in late 2008 that wiped more than 40% off the value of their portfolios in six months. Many burned by the dot-com crash never trusted the markets again.

This year, the sovereign debt crisis in Europe, coupled with the Middle East's political unrest, spooked investors into buying low-yielding bonds and certificates of deposit. But that came after several years in which they shifted out of funds in favor of exchange traded funds and fixed-income alternatives.

Americans may once again be doing themselves a disservice by staying out of the equity markets when they should be getting in. There is a $1.2 trillion spread between bond and equity mutual fund investing, an unprecedented level. Investors flocked to bonds in 2011, driven by Europe's woes and a U.S. downgrade. Because of the wide spread, Charles Schwab Chief Investment Strategist Liz Ann Sonders is biased toward investing in stocks versus bonds, she said this week.

Boom-and-bust periods tend to cloud investors' thinking. The worst year for mutual funds was 2008, when withdrawals reached $147 billion as the benchmark S&P 500 Index fell 37%. But that was followed in 2009 with a 26.5% jump and, then, a 15% gain in 2010 -- and many investors missed out on the rebound. That will potentially put them years behind in their 401(k)'s, as stocks tend to outperform bonds over longer periods.

Trying to detect a theme among the top-performing stocks of the decade, which swam upstream in a torrent of despair, is useless as the group is an odd lot. They range from high-tech, led by the now-ubiquitous mutual fund holding, Apple (AAPL), to low-tech, featuring stylish handbags as represented by Coach (COH). And then there's one most people haven't heard of: Titanium Metals (TIE), the maker of a material used in everything from aerospace to racing motorcycles.

The top-performing stocks of the past decade ought to persuade investors to take another look at equities. After all, many investment banks and research firms are predicting gains for the S&P 500 this year.

Stating the obvious "ouch," Apple was selling for $10.95 back in 2001. It closed out 2011 at $405 -- a mind-blowing 3,758% return, and it's still on the rise. Apple is now at $422.40.

From another angle, those of you seeking recurring income ought to listen to your mother: "Never bet against the phone company" -- AT&T (T).

That's why AT&T tops the dividend-paying list for the past decade, and it now carries a whopping 5.9% yield, almost three times that of the next-best payer, Exxon Mobil (XOM), at 2.1%. The much-derided phone company's shares have an annual average return of 4.5% over 15 years. This is good stuff, people, in a volatile economic environment.

But if you bought even one of these 10 stocks, you'd be a happy camper, and fabled fund manager Peter Lynch, he of the Fidelity Magellan Fund's (FMAGX) halcyon years, would be right proud of you. Lynch mentions the outsized gains of the "ten bagger" companies in his revered book on investing, One Up on Wall Street.

If you didn't, be consoled because, judging from the performance of the hired guns -- mutual fund managers -- they only got some of them right. The total return of all mutual funds over the past year, including dividends, is a loss of 0.5%, according to Morningstar. Over 10 years, it's a gain of 4.5%.

Here are the 10-top performing stocks in the S&P 500 in the decade ending 2011, ranked by total return for the period, from last to first:

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