Picking the Winners

In late June 2023, Henrik Bessembinder, a professor studying stock returns since 1926, also published a list of the 25 best performing stocks over the 1926-2022 period. [Bessembinder, Henrik, Shareholder Wealth Enhancement, 1926-2022, 6/17/23]

These stocks represented 0.1% of all stocks and 1/3 of all return over treasury bills, a total of $17.6 trillion. Apple led with a $2.7 trillion excess return. Microsoft ranked second with $2.1 trillion excess return, Alphabet ranked fourth with $1 trillion, and Amazon ranked fifth with $764 billion.

The concentration of returns over long periods of time has surprised many reviewers of Bessembinder’s work. We discuss this in a prior article, but it is also important to keep in mind that the average public stock only remained public for seven years. Most are acquired by another company or fail.

To reap the full reward of investing in these super stocks, one had to buy them when first listed and hold them. Apple not only had severe ups and downs but nearly went bankrupt, as we have noted elsewhere.