Apple Still Wears the Market Crown. It Can Easily Slip.

Many investors seem to believe that todays giant technology companies will dominate the stock market for decades to come. Years, maybe. Decades, probably On Aug. 31,

Exxon Mobil Corp. XOM 1.15%increase; green up pointing triangle was booted from the Dow Jones Industrial Average. That should serve as a warning about the technology stocks that, at least until Thursdays shocking 5% decline, have been the markets darlings. As recently as 2011, Exxon had the biggest market capitalization of any company in the world. It had been the longest-tenured company in the Dow, having entered the index in October 1928. A gas station attendant at an Esso station, circa 1949. Esso was part of the company now known as Exxon Mobil, which dominated the stock market for years. Whats more, as long ago as 1912 Exxon (then known as Standard Oil Co. of New Jersey) had been the worlds second-largest stock, surpassed in market value only by U.S. Steel X -0.08%decrease; red down pointing triangle. If such a durable titan can fall away, so can the tech stocks that so many investors have come to regard as invincible. Exxon had been one of the five biggest U.S. stocks by market value in every decade from the 1930s to the 2010s, according to Dimensional Fund Advisors, an investment-management firm based in Austin, Texas. Now it isnt even among the top 30. It is hard to stay on top, but its even harder to get there. Of the 24,979 companies (including real-estate investment trusts) that issued common stock between December 1925 and July 2020, only 11 have ever ranked number one by market value. Thats according to the Center for Research in Security Prices LLC, a data and index provider affiliated with the University of Chicago Booth School of Business. AT&T Corp. was the largest stock in the U.S. 43% of the time over that nearly 95-year period. In the early 1930s, it alone accounted for one-eighth of the value of the entire U.S. stock market. As recently as the 1960s it was still one-twelfth of total U.S. market value all by itself.

Belles of the Ball

Since the end of 1925, only 11 companies have ever ranked number one among all U.S. stocks by market value. Sooner or later, each leader has tended to fade. Percentage of trading days each year that the companys market capitalization was No. 1

LATEST MARKET

CAPITALIZATION RANK

0%

25%

50%

75%

100%

AT&T 174

GM 1,629

Exxon Mobil 32

DuPont 70

IBM 55

GE 118

Altria Group 78

Walmart 8

Microsoft 3

Apple 1

Amazon.com 2

International Business Machines Corp. was no. 1 in market value among all stocks 20% of the time, and General Electric Co. and Exxon each ranked number one on 10% of all trading days. In decades past, General Motors Corp.nowadays no longer even among the 150 largest stockswas often king, ranking number one more than 6% of the time.

Then there were the companies whose reign at the top lasted only a few days.

Altria Group Inc., formerly Philip Morris Cos. Inc., was the biggest stock in the U.S. for 34 days in 1991 and 1992. E.I. DuPont de Nemours & Co., for 11 days in 1955; and Walmart Inc. for a grand total of three days in 1992.

Some of Exxons shrinkage is its own doing. Years ago, the company embarked on one of the biggest share-repurchase programs in history. Exxon bought back 2.3 billion sharesmore than one third of its total common stockfrom 2004 through 2020. The company spent $231.4 billion on these buybacks, according to S&P Dow Jones Indices analyst Howard Silverblatt. To put that in perspective, Exxons cumulative spending on buybacks over that period exceeds the current market value of course, investors who participated in Exxons buybacks had to reallocate the cash they received when they sold their shares back to the company. Much of the proceeds from selling Exxon surely went into buying stocks like Bank of America Corp., the 27th-largest company in the S&P 500, Apple Inc., Microsoft Corp. and Amazon.com Inc.

Those are the very companies that have jostled back and forth for the position of biggest stock in the U.S. market. Exxon not only shrank itself, but made other stocks bigger in the process. Even after Thursdays tumble, Apple still was the largest U.S. stock, with a market value of $2.29 trillion; Exxons shares had a total value of $167 billion.

QUESTION;

1. Write one 7-line paragraph SUMMARY of the article and 5-line paragraph stating lessons learned