Don't look at the graph yet – can you name America's most valuable brands? You're likely to get the three biggest ones right: Apple, Google, Microsoft. In its most recent annual study of the world’s wealthiest companies, Forbes estimates Apple is worth a total of $154.1 billion, Google comes a distant second at $82.5 billion and Microsoft is the U.S.’s third-most valuable brand at $75.2 billion. These three tech giants have dominated both the economy and the culture for the last two decades. And they're colonising ever more aspects of our daily lives – marketing smart thermostats, building electric vehicles and even designing smart scarves.
This graph – it's okay, you can look now – lists today’s biggest American companies for total value (as calculated by Forbes), and shows the evolution of their stock value from 1980 to 2016.
The value of a company’s shares goes up and down as they are bought and sold on the stock exchange. Good company news (excellent sales figures, for example) and favorable market conditions (economic growth) makes investors eager to buy shares, pushing prices up - and vice versa. However, price per share in itself does not reflect a company’s total value, as the size of that ‘share’ varies per company.
Only four of the brands on the list are still firmly rooted in the offline world. The presence of Coca-Cola and McDonald's on the list serves as a reminder that we need to eat and drink; Walmart and Nike represent two secondary urges: shopping and keeping fit.
All the other companies are, in one way or another, tentacles of the great all-knowing online octopus, from the semiconductors churned out by Intel via the transactions instantly processed by American Express to the electricity provided by GE to make it all possible.
To appreciate how new much of this is, look at the graph for January 1980 (that same month is used for every year in the GIF): 8 of today's biggest 18 brands aren’t on the list yet. Even Microsoft and Google, today’s #2 and #3, are absent. The most attractive (or at least the most expensive) stocks back in 1980 are IBM, General Electric, McDonald's and Disney.
In 1980, Apple stock is on sale for a modest $28.25. Prices go up and down like a rollercoaster, and as late as 1997, they're at no more than $16.62 per share. In 2000, Apple shares break through the $100 barrier – but drop dramatically the year after. Only by 2008 does Apple break its previous record, going on a more consistent upward streak that peaks at $500 in 2014. Last January, Apple shares stood at $97.34.
Microsoft stock first appears in 1987, at $73.13. At first, it seems a more solid investment – oscillating less than Apple's stock, and achieving good value until about 2000. Then the stock starts to weaken, dropping to $17.1 in 2009 and recovering only to $55.09 by the start of 2016.
Of America's biggest brands, late-comer Google is the undisputed king of the stock market. First traded in 2005 at a whopping $195.62 per share, its near-continuous rise would take it to an amazing $1,180.79 in January 2014. Google share currently trades at a more modest, but still market-leading $742.95 per share.
Facebook stock has been around only since 2013, and has only known ups since its introduction, but hasn't climbed as high as either – yet.
While stock in the new tech companies increases in value by leaps and bounds, 'old tech' and other companies have a much harder time at value creation.
Coca-Cola stock stood at $35.12 in 1980, and has gone up to only $42.92 by January 2016. Of course, there have been ups and downs in between, with a range from $32.63 in 1982 to $83.88 in 1986. That offers plenty of opportunity to buy low and sell high. But generally, as with other traditional stocks, both the yields and the risks are lower than the more 'exciting' new tech companies.
But then again, exciting does equal risky. Who is to say that the new kids on the block won't overstretch on one of their costly R&D projects, and their bubble will burst? On the other hand, isn't it normal for old companies to wither away and die? One thing seems certain: in another 40 years, this list will contain a lot of names we have yet to hear from.
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Sources: Table 1
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