Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
The majority of equity-market wealth is created by just a handful stocks. According to a recent study of the performance of more than 64,000 stocks from 1990 to 2020, the compound annual returns (CAGRs) of 55.2% of all stocks during that 30-year period was less than the return for one-month U.S. Treasury bills.
All the $75.7 trillion in net global stock market wealth created over the past 30 years was generated by just 2.4% of stocks.
Picking the few "monster" stocks among the many thousands of underachieving ones is extremely difficult. But for those who guessed right and had the discipline to stick with those winners through bull and bear markets, the rewards have been truly remarkable.
Here are the 20 best-performing stocks of the past 30 years
Here are the charts for the top 10 wealth-creating stocks.
1. Broadcom offers a highly diverse product portfolio across an array of markets. Avago focuses primarily on radio frequency filters and amplifiers used in high-end smartphones, such as the Apple iPhone and Samsung Galaxy devices. Legacy Broadcom targets networking semiconductors, such as switch and physical layer chips, broadband products (such as television set-top box processors), and connectivity chips that handle standards such as Wi-Fi and Bluetooth. (Source: StockRover)
2. Amazon – We all know what this company does, so I’ll skip the description.
3. Nvidia is the top designer of discrete graphics processing units that enhance the experience on computing platforms. The firm's chips are used in high-end PCs for gaming, data centers, and automotive infotainment systems. In recent years, the firm has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm's graphics processing units. (StockRover)
4. Salesforce.com provides enterprise cloud-computing solutions, including Sales Cloud, the company's flagship customer relationship management software-as-a-service product. It also offers Service Cloud for customer support, Marketing Cloud for digital marketing campaigns, Commerce Cloud as an e-commerce engine, the Salesforce Platform, which allows enterprises to build applications, and other solutions, such as MuleSoft for data integration. (StockRover)
5. Home Depot I’ll skip the description for this familiar company.
6. Microsoft Needs no explanation.
7. Google (Alphabet) Needs no explanation.
8. Adobe provides content creation, document management, and digital marketing and advertising software and services for creating, managing, delivering, measuring, optimizing, and engaging with compelling content over multiple operating systems, devices, and media. The company operates with three segments: digital media content creation, digital experience for marketing solutions, and publishing for legacy products. (StockRover)
9. United Health Group is the largest private health insurance provider in the United States, providing medical benefits to 48 million members across its U.S. and international businesses at the end of 2020. UnitedHealth has obtained massive scale in managed care. Along with its insurance assets, UnitedHealth's continued investments in its Optum franchises have created a healthcare services colossus that spans everything from medical and pharmaceutical benefits to providing outpatient care and analytics to both affiliated and third-party customers. (StockRover)
10. Tencent Holdings is a Chinese Internet giant with businesses and investments in a wide variety of Internet services and contents. Major services include communication and social networking (Weixin/Weixin and QQ), online PC and mobile games, content (news, videos, music, comics, and literature), utilities (email, app store, mobile security, and mobile browser), cloud services, and financial technology. Tenpay is a payment solution that enables closed-loop transactions in Tencent's ecosystems and has been adopted by many third-party partners and offline merchants. (StockRover)
Here is a table showing the complete list of big winners
Included is the total value, in U.S. dollars, that was traded on day one of the initial public offering for each. Google and Facebook attracted the most interest from traders and IPO speculators.
Why did I leave Tesla off of the top 20 list? Because it deserves its own category. Its 60% annual growth rate since its debut in 2010 is miles ahead of the next big name.
Takeaways
What can we expect from these big winners in the months and years ahead? They will probably continue their winning streaks, but I doubt they can match or exceed their track records. Mean reversion is a powerful force in the stock market, and investors should factor this into their thinking as they position their portfolios for the next few years.
Over the past 30 years, the S&P 500 has averaged an annual return of 9.5%, while these big winners have averaged 24.2% (not including Tesla). This magnitude of outperformance is not likely to be repeated over the next 10 years.
What’s an investor to do?
I advocate having a few broad-based ETFs as core holdings and select specialized ETFs or individual stocks as satellite holdings. In the next 10 years, I like big data, artificial intelligence/robotics, and cybersecurity. Some names would include CSCO, QCOM, FDS, and FICO. One of these could find a spot on the top-20 list 10 years from now.
Erik Conley is the former head of equity trading at Northern Trust Co. in Chicago. After a 30-year career in trading and portfolio management, he now runs a nonprofit investor education and advocacy organization called ZenInvestor NFP. His website is www.ZenInvestor.org and you can reach him at [email protected]
More Global Markets Topics >
2. Amazon – We all know what this company does, so I’ll skip the description.
4. Salesforce.com provides enterprise cloud-computing solutions, including Sales Cloud, the company's flagship customer relationship management software-as-a-service product. It also offers Service Cloud for customer support, Marketing Cloud for digital marketing campaigns, Commerce Cloud as an e-commerce engine, the Salesforce Platform, which allows enterprises to build applications, and other solutions, such as MuleSoft for data integration. (
7. Google (Alphabet) Needs no explanation.
9. United Health Group is the largest private health insurance provider in the United States, providing medical benefits to 48 million members across its U.S. and international businesses at the end of 2020. UnitedHealth has obtained massive scale in managed care. Along with its insurance assets, UnitedHealth's continued investments in its Optum franchises have created a healthcare services colossus that spans everything from medical and pharmaceutical benefits to providing outpatient care and analytics to both affiliated and third-party customers. (
10. Tencent Holdings is a Chinese Internet giant with businesses and investments in a wide variety of Internet services and contents. Major services include communication and social networking (Weixin/Weixin and QQ), online PC and mobile games, content (news, videos, music, comics, and literature), utilities (email, app store, mobile security, and mobile browser), cloud services, and financial technology. Tenpay is a payment solution that enables closed-loop transactions in Tencent's ecosystems and has been adopted by many third-party partners and offline merchants. (
Included is the total value, in U.S. dollars, that was traded on day one of the initial public offering for each. Google and Facebook attracted the most interest from traders and IPO speculators.
