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The stock market is up, the economy is growing and investors are cheering. But what's to cheer about?

Anything that drops from a high enough level is bound to bounce like the proverbial dead cat, and when you rally off a low enough number, a stratospheric percentage gain can mask the absolute numbers. It might be instructive to take a look at some of the most widely-held stocks and see how they have recovered from the bear market that started in 2000.

The number of outstanding shares determines which stocks are the most widely-held. Most of these shares are held for individual investors by mutual funds, which typically invest for the long term, so not much movement in and out of the stocks is to be expected. Many investors -- and shame on them -- haven't the slightest idea what companies are being held by their mutual funds, and even more are clueless when it comes to how these companies make money.

Consider a current list of the most-widely held stocks and their performance in recent years compared to the S&P 500:

Stock	2003	2000 - 2004 *	P/E ratio **
General Electric (GE)	+ 27%	- 28%	22.8
Pfizer (PFE)	+ 16%	+ 10%	55.3
Microsoft (MSFT)	+ 6%	- 40%	30.3
Cisco Systems (CSCO)	+ 85%	- 59%	48.1
Intel Corp (INTC)	+ 106%	- 42%	38.9
Lucent Technologies (LU)	+ 125%	- 92%	N/A
Int'l Business Machines (IBM)	+ 20%	- 11%	24.2
Time Warner (TWX)	+ 37%	- 67%	N/A
SBC Communications (SBC)	- 4%	- 36%	12
S&P 500	+ 26.4%	- 18.7%	23.5
* - As measured from Mar 1, 2000 to Jan. 13, 2004 ** - Individual P/Es based on trailing 12-month earnings. S&P 500 figure is a historical average from 1989 to 2003.

Not a bad portfolio to have held last year, but all but one of those stocks remain far below their level when the market peaked in March 2000. Only Pfizer rewarded investors through the bear market, and it underperformed substantially during last year's rally. Several companies that were popular in 2000 -- including EMC (EMC), Oracle (ORCL) and AT&T (T), which was one of the most commonly-found holdings for several decades -- didn't make it to this year's list. Newcomers include Johnson and Johnson (JNJ), Agere Systems "B" shares (AGR/B) and AT&T Wireless (AWE).

So what's the common theme?

Most of these stocks are owned by large-cap growth funds, which represent the consensus of where safe, predictable and above-average growth can be found. Also, these large-cap fund managers are judged on quarterly and annual returns, so they buy stocks that they expect to rally and try not to take record big losses. There is also a residual taste of the "old economy/new economy" battle, where some mature technology concerns are now considered "old economy," while "new economy" darlings still disappoint.

Another evident trend is the shift from the much ballyhooed telecommunications sector to staid, boring health care stocks. Maybe money managers have grown tired of the capricious nature of telecoms and prefer the dependability of health care, especially given the demographic weight of Baby Boomers. They certainly are paying more attention to financial statements and management in the wake of Enron, WorldCom, Adelphia and their ilk.

Though they still have a long way to go before regaining their peaks, few widely-held companies are cheap on a price-earnings basis compared to the S&P 500's average over the last 15 years. Many of these firms are burdened with debt. Several are spin-offs of weak parents (LU and AWE were once part of AT&T, and Agere is a spin off of Lucent).

It's always easy to say "I would have sold these dogs" in hindsight. The reality is, most investors and fund managers didn't - no one wants to be the first one to jump off a sinking ship. Fortunately, it's never too late to look for cash-rich, relatively cheap sector leaders with transparent financials that could benefit in a global economic recovery.