Buy the Dow -- And Other Mega Caps

Stocks of the largest U.S. companies are surprisingly cheap in today's wretched market.

Mega-cap stocks were pulverized during the 1973-74 and 2000-02 bear markets. But mega caps -- stocks with the largest market capitalizations -- have performed so poorly for so long that they're now among this difficult market's most enticing stocks.

Only those of us with some gray in our hair can remember the "Nifty 50" -- the enormous companies whose stocks were too big to fall. In 1971 and 1972, as most other stocks lost ground, these "one-decision stocks" -- that is, stocks you bought, then forgot about -- were the only way to make money. How could stocks such as Coca-Cola (symbol KO), General Electric (GE), International Business Machines (IBM) and Johnson & Johnson (JNJ) ever inflict serious pain on shareholders? Many experts thought the party would never end.

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Steven Goldberg
Contributing Columnist, Kiplinger.com
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for Kiplinger.com and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or sgoldberg@kiplinger.com.