The Damage to These Stocks Is Done

Despite THURSDAy’s rally, 2008 has featured widespread wealth destruction in equities, especially among many of the well-known names that have been part of institutional portfolios for years. Even if the market has reached a bottom -- and there has yet to be any objective indication that it has -- many former growth stocks, many of which are still widely owned, will take decades to recover from recent lows, if they ever do.

Consider today's column a wall of shame for the “old soldiers” that, while they might not die, are likely to simply fade away. Even a brief glance at some of the charts below might raise questions about the value of sticking with stocks for the “long haul.”

Nortel Networks (NT)

Only about a decade ago, Nortel Networks was the largest stock on the Toronto Stock Exchange and one of the leading telecommunications companies in the world. On Thursday RBC Capital Markets analyst Mark Sue warned that Nortel may be hurtling toward bankruptcy and cut his price target on the shares to $0. Currently at 78 cents, the stock would need to rise 114,002% to reach its 2000 high of $890.

Eastman Kodak (EK)

Eastman Kodak was a member of the Dow Jones Industrial Average back in 1930 through 2004, and one of the “nifty 50” growth stocks of the late 1960s... and 1980s. Since breaching $90 a share back in the late '90s, however, shares have fallen steadily, dropping to a recent $8 a share -- less than half the price the company traded at in the mid- 1970s.

Time Warner (TWX)

One of the must-own stocks of the go-go 1990s, Time Warner now trades at half the price it did as recently as 2007. The stock is near a 10-year low, well below the levels at which AOL bought the company in 2001.

Motorola (MOT)

During the early technology bull market of the mid-1990s, Motorola was the stock to own. (Remember when cellphones were still considered a growth business?) Even activist Carl Icahn couldn’t meaningfully rally the shares. The stock now trades at the same levels it did back in 1990, having given up all of the gains scored during the biggest bull market in stock market history. Even though shares were up more than 15% on Thursday, Motorola's stock still needs to gain more than 1,200% to regain its early 2000s high above $60 a share.

International Paper (IP)

Because it’s a company with tremendous physical assets, namely more than 550,000 acres of forestland and substantial investments in plants and infrastructure, International Paper has always seemed to be one of those names with a natural floor. Yet, shares are now at levels not seen since 1986, requiring a 337% boost to regain the highs seen in the early 2000s.

JDS Uniphase (JDSU)

The company formally known as JDS Uniphase, now simply known as JDSU, was one of the biggest highfliers of the technology era, enjoying a string of three two-for-one stock splits every 90 days during the last half of 1999. In 2001, the company announced the largest write-down of goodwill and business losses in business history at the time: $45 billion. At a recent $3.40, the stock trades exactly where it did back in 1995, having given up the entirety of the bull market gains that once pushed its stock to more than $1,120 a share in 2000.

Russia has learned that thuggery and nationalism isn’t great for business. The country’s RTS Index is down roughly 72% year to date, thanks to an overconcentration in commodities and an anticapitalist government that’s made war with its neighbors and flouted basic individual rights and rule of law. Its currency has also been trashed, falling from roughly 23 rubles to the dollar in July to over 27 today.

We’ve followed Rydex’s innovative suite of CurrencyShares since the original CurrencyShares Euro Trust was introduced in late 2005. While the U.S. dollar has regained its status as the world’s safe-haven currency, Rydex has recently launched the CurrencyShares Russian Ruble Trust (XRU), the first exchange-traded fund offering pure-play exposure to the Russian currency. Each share offers a beneficial ownership of 1,000 rubles, with the fund now yielding more than 15% as investors flee from risky assets world-wide.