growth stocks in the last decade

When you ask most investors for their favorite stocks, you'll rarely hear them share a blue-chip name like Johnson & Johnson, Kraft Foods or Wal-Mart. Instead they will tell you about some amazing growth stock that will be the next Google, Microsoft or Apple.

These investors believe that by simply buying stocks with the greatest earnings growth potential they will make money. Sadly, our research clearly shows this not to be true...not even close.

our research details beyond a shadow of a doubt the vast underperformance of growth stocks over the past decade. Here are the results.

Projected Earnings Growth Rate	*Annualized % Return
0 - 10%	5.4%
10 - 20%	2.6%
20 - 30%	-0.2%
30%+	-9.7%
S&P 500	-3.3%

*The study had a 12-week rebalancing of stocks between 1/1/2000 and 9/11/2009

Stocks with the lowest projected growth rates actually generated the highest return of +5.4% per year. Yes, I know that doesn't sound like much, but remember the average return of the S&P 500 over that stretch was an anemic -3.3% thanks to 2 ferocious bear markets.

Each level of additional earnings growth came with decreasing levels of profits for investors. As we look at the most aggressive growth stocks, with 30%+ expected earnings growth, we find an embarrassingly low -9.7% return.

[Yeah, but how did they do in the previous decades? And overall??]