healthy markets also have their share of individual losers. For example, from
the early 1980s through the late 1990s, the U.S. stock market had one of the
greatest appreciating markets in history. You’d never know it, though, if you
held one of the great losers of that period.
Consider a company now called Navistar, which has undergone enormous
transformations in the past two decades. This company used to be called
International Harvester and manufactured farm equipment, trucks, and
construction and other industrial equipment. Today, Navistar makes
mostly trucks.
In late 1983, this company’s stock traded at more than $140 per share. It then
plunged more than 90 percent over the ensuing decade (as shown in Figure
2-3). Even with a rally in recent years, Navistar stock still trades at less than
$50 per share (after dipping below $10 per share). Lest you think that’s a big
drop, this company’s stock traded as high as $455 per share in the late 1970s!
If a worker retired from this company in the late 1970s with $200,000 invested
in the company stock, the retiree’s investment would be worth about $25,000
today! On the other hand, if the retiree had simply swapped his stock at
retirement for a diversified portfolio of stocks, which I explain how to build in
Part II, his $200,000 nest egg would’ve instead grown to more than $2,800,000!
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