Brands you know pay you back: Top 100 brands outperform S&P 500 by 60 percentage points

NEW YORK -- I'm a fan of Google. I'm hooked on Apple's iPhone. And I love that Danone yogurt, thanks to its low-cal version that still tastes like the real thing. But who would've ever thought that the brands I know and love could pay me back? It turns out America's Top 100 brands (as ranked by BusinessWeek and InterBrand) would have generated a 31% return from 2000 through 2008, while the S&P 500 left you with losses to the tune of 28%.

 What does this mean to your portfolio? If you had invested $10,000 in the S&P 500 during this period, you would've had a loss of $2,810; your portfolio would've dropped to just $7,190 in value.

But if you invested $10,000 in America's Top 100 brands, you would've gained $3,140 (enough to buy a year's worth of groceries, according to the Census Bureau), bringing your portfolio to $13,140.

What's interesting is that, when we look at the top 10 performers of the 100 brands, just about all are companies you probably know quite well.

What's interesting is that, when we look at the top 10 performers of the 100 brands, just about all are companies you probably know quite well.
What's also worth noting about the study is that the top 100 brands include names like AIG

What can we take away from this?

First, brands perform well because companies tend to reinvest in those brands and deliver what their customers want.

Second, quality brands tend to be less volatile than other companies. The study showed that the volatility for the S&P 500 during the final year (and the most volatile of the nine years) was 57.71% vs. 52.85% for the brands. Not a big difference, but still comforting in these uncertain times.

Third, even with the dramatic drops for the market, consumers could have seen a higher return overall had they invested in "what they know."

Finally, if you, as an investor or first-timer, simply use the insights you already have -- by listening, watching, and talking to others -- can make smarter decisions about your 401(k), your job and your life.

 By the way, as you would expect with the financial crisis of 2008, financials were the worst performing group. They were far outpaced by sports, autos (largely due to Volkswagen), and food and drink.