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I began the conversation with Lee by noting how rarely investors stop to consider how dramatically the upper ranks of the stock market have changed. When we looked back twenty five years, the list of dominant companies in the S&P 500 was almost unrecognizable compared with today.
What the Top of the Index Looked Like in 2000
Lee walked through the names that defined the index before the dot com collapse. GE, Intel, Citigroup and Pfizer all sat comfortably inside the top twenty five. Many of those companies still exist, but their market weight has shrunk so much that they no longer shape the index. Incredibly, only Microsoft and Oracle remain in the top group today. Both were founded in the same era, both were built by entrepreneurs and both managed to navigate multiple technology shifts that wiped out competitors.
Survivors and New Entrants
I pointed out that the companies replacing them had very different starting points. Amazon in the early 2000s traded for less than five dollars. Apple was recovering from a near death period in the late 1990s. Nvidia was another sub five dollar stock that few investors viewed as a future centerpiece of the market. Those companies now anchor the index, a reminder that leadership often emerges from firms that appear small, risky or misunderstood at the time.
Why Only a Few Make It Through Each Cycle
Lee and I agreed that the long term survivors shared a common trait. They adapted. Microsoft expanded beyond its original software footprint into cloud computing, enterprise tools and now AI. Oracle diversified its database business into cloud services and enterprise applications. Many of the once dominant companies either stalled or failed to evolve at the speed demanded by changing technology cycles.
A Generational Shift in Plain View
When we think about a generation in market terms, twenty five years is a reasonable timeframe. That period perfectly captures the transition from the early internet era to mobile computing and now to artificial intelligence. The market’s top tier reflects that evolution. What stood out to both of us was how few companies can retain leadership through multiple waves of disruption. Only two did it this time.
Transcript:
[00:00:04] Doug Mcintyre: Lee, let’s look at what to me is a generational change in the stock market.
[00:00:09] Doug Mcintyre: If you go back a ways and you look at the, the most valuable companies in the s and p 500 and you, you fast forward to today, most of those companies have been replaced in the s and p 500.
[00:00:23] Lee Jackson: Absolutely. Well, they’ve been replaced as the one of the top 25 companies. That’s what I’m saying. Right, right. Yeah.
[00:00:29] Lee Jackson: Yeah. You’re absolutely right.
[00:00:30] Doug Mcintyre: That tier there, most of ’em were gone.
[00:00:33] Lee Jackson: Well, think about it, Doug, in, in 2000, you know, before everything blew up, who were the big companies in there? GE. Intel (NASDAQ: INTC), Citi Group, names like that, Pfizer. And now of all of those stocks that were the top 25 stocks in 2000 in terms of market cap and waiting, only two are still in there, Microsoft (NASDAQ: MSFT) and Oracle (NYSE: ORCL), which is astonishing. Wow. That’s it. That’s it. All the other guys are out and a lot of those companies still exist, you know? Yeah. AT & T was one, you know, a lot of those companies exist, but they’ve just been replaced or, or it’s, it’s been a, a bigger bang for the tech buck. But those are the only two, you know, in the top 25 of the s and p 500 right now that are still in it, that were in it in 2000,
[00:01:24] Doug Mcintyre: and they were started at roughly the same time.
[00:01:27] Doug Mcintyre: You know,
[00:01:28] Lee Jackson: mid eighties, early eighties. Yeah.
[00:01:30] Doug Mcintyre: Yeah. And uh, to me, the fascinating thing about that is, and they were both started by entrepreneurs,
[00:01:36] Lee Jackson: right?
[00:01:37] Doug Mcintyre: You know, they were started by entrepreneurs. They were started about the same time. A lot of companies did not make it through the tech collapse. It happened a decade after that.
[00:01:49] Doug Mcintyre: Yep. These guys made it through. Their stocks obviously got knocked down at that point, but they’ve more than recovered. They’re now two of the kings of the market.
[00:01:57] Lee Jackson: Well, and you know, other, other companies that are in there now are companies that in 2000 or in 2001 were less than $5. Amazon (NASDAQ: AMZN). Or don’t exist
[00:02:11] Doug Mcintyre: or didn’t exist.
[00:02:12] Lee Jackson: Apple (NASDAQ: AAPL). Apple was one, you know? Yeah. And, and, and you know, they, they were sub and we’ve always made the case that you, you never underestimate the sub $5 stock because it, it could, uh, Nvidia (NASDAQ: NVDA) was a sub $5 stock at one point. It could be the
[00:02:27] Doug Mcintyre: next, it could be the next a hundred dollars stock.
[00:02:29] Lee Jackson: Right? Right. And so I, I just think it’s interesting that, and like you said, it literally a generation is usually about 25 years.
[00:02:36] Lee Jackson: Give or take a few either way, and that’s almost exactly what it’s been, a generational change. Were only two mega, mega. You know, tech stocks and who, who were smart enough to gravitate, I mean, between Ellison and all the people that were, you know, running Microsoft over those years, they, they could see the writing on the wall.
[00:02:56] Lee Jackson: You can’t, you know, it’s not gonna be just Oracle product or Microsoft software, there’s more to the mix and they stayed in it and, and have profited. And folks that stayed in that long did extremely well with those stocks