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12-12-2021, 05:18 PM
(This post was last modified: 12-12-2021, 06:39 PM by Scooterd.)
"JUST 86" stocks have accounted for $16 trillion in wealth creation, That's half of the stock market total, over the past 90 years. Of the 26,168 companies with US common stock from 1926 to present; only 1,036 companies (42.17% of the total) created positive wealth, while 15,132 companies (57.83% of the total) reduced shareholder wealth, as compared to a US Treasury bill benchmark.
Technology stocks accounted for $9.00 trillion of that 16 trillion in wealth creation, or 18.99% of the total, the largest of any sector. Finance firms accounted for 15.22% of aggregate net wealth creation, followed by Manufacturing firms, which accounted for 12.49%, and Healthcare and Pharmaceuticals firms, which accounted for 9.79%.
"There's no use diversifying into unknown companies just for the sake of diversity"- Peter Lynch
"We strongly believe that the supply of great businesses is severely limited and to engage in broad diversification is dilutive to the implicit purpose of earning above-average longer-term returns” - Frank Martin
“Purchasing a business at a price that provides reasonable assurance of a generous margin for error is an erudite way of saying to ourselves, ‘Buy low, stupid’”- Frank Martin
Just Thoughts,
- Scoot
Go Packers!!!
“Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming "Wow! What a Ride!”― Hunter S. Thompson, The Proud Highway
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I am interested in creating income- Wealth creation comes along with that often enough but is not a focus. Realible, safe and steadily increasing income
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I am more amazed (perhaps alarmed), by the concentration of wealth creation in a half dozen stocks right now. I am hopeful it doesn't end in the manner the Nifty 50 did. Fifty doesn't sound like a bad number right now. The FAANG+ M etc have sound business models so perhaps the market has time to re-arrange the market cap some over time.
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(12-13-2021, 09:08 AM)fenders53 Wrote: I am more amazed (perhaps alarmed), by the concentration of wealth creation in a half dozen stocks right now. I am hopeful it doesn't end in the manner the Nifty 50 did. Fifty doesn't sound like a bad number right now. The FAANG+ M etc have sound business models so perhaps the market has time to re-arrange the market cap some over time.
For those Unaware
(*1969-1970 Forgotten Bear)
The implosion of the Nifty Fifty stocks alone wiped out all the gains of the previous seven years.
- Scoot
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12-13-2021, 09:45 AM
(This post was last modified: 12-13-2021, 10:17 AM by rnsmth.)
The Nifty Fifty did fine as a buy and hold. Lots of money made over the decades. I read a good article about that somewhere, but I do not remember where. Between spin-offs, mergers, etc, it would have made the holders very wealthy
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(12-13-2021, 09:40 AM)Scooterd Wrote: (12-13-2021, 09:08 AM)fenders53 Wrote: I am more amazed (perhaps alarmed), by the concentration of wealth creation in a half dozen stocks right now. I am hopeful it doesn't end in the manner the Nifty 50 did. Fifty doesn't sound like a bad number right now. The FAANG+ M etc have sound business models so perhaps the market has time to re-arrange the market cap some over time.
For those Unaware
(*1969-1970 Forgotten Bear)
The implosion of the Nifty Fifty stocks alone wiped out all the gains of the previous seven years.
- Scoot
And it was mostly oil and automakers dominating the top ten. Things change several times in a normal lifetime.
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12-13-2021, 10:17 AM
(This post was last modified: 12-13-2021, 10:21 AM by fenders53.)
(12-13-2021, 09:45 AM)rnsmth Wrote: The Nifty Fifty did fine as a buy and hold. Lots of money made over the decades. I read a good article about that somewhere, but I do not remember where. Between spin-offs, mergers, etc, it would have the holders very wealthy
Far more specific details would be needed to assess that claim. There were a number of very high profile bankruptcies on that list, and stocks that flew for a time later and died, or vice versa. As always, picking the time frame to analyze matters. Stats are fun but only rich folk owned the entire nifty fifty back then. Few today own a substantial holding in all of the top fifty stocks of 2021. I'd guess most don't even own 20% of them.
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There's some info on the Nifty Fifty in the article I wrote about Mike Nadel's DG50 project.
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(12-13-2021, 10:36 AM)EricL Wrote: There's some info on the Nifty Fifty in the article I wrote about Mike Nadel's DG50 project.
I gave it a brief look. Seven years ago and half the stocks underperform the market since. Some by a wide margin. If I have a point it is normal folk can't buy meaningful positions in entire indexes or "lists". Your stock analysis skills are not a waste of time, and be ready to adjust if you are wrong. Avon, Polaroid and Xerox were major Nifty 50 stocks. Add in the oil stocks that have just been OK for over a decade until recently. Can't ride too many of those into the dirt on hope as an income investor as the income will go away and even more likely your capital.
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(12-12-2021, 05:18 PM)Scooterd Wrote: "JUST 86" stocks have ...
Interesting read.
Could you provide a source so I could read more into depth?
After applying DGI criteria for some 6 six years, my major sectors are
Health/Pharma (20%),
Finance (12%),
Technology (11%).
In 2022, with V and MA, 2.5% may migrate from Technology to Finance (new S&P definition ahead?), but Technology still be the 3rd largest sector.
If I had not sold MSFT and most of my AAPL in mid 2020 (as a liquidity backup for our checking accounts),
Technology would be some 17%.
Wealth creation ... FWIW ... our wealth (of time):
Six years ago we had a business and no time, now we have no bussiness (besides of DGI) and time.
Spontaneously, yesterday 800km highway eastbound, a funeral tomorrow, 800km westbound on Wednesday.
If still in business ... no way.
Martin,
writing from Poland
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12-13-2021, 12:52 PM
(This post was last modified: 12-13-2021, 12:56 PM by Scooterd.)
(12-13-2021, 11:45 AM)Forticus Wrote: (12-12-2021, 05:18 PM)Scooterd Wrote: "JUST 86" stocks have ...
Interesting read.
Could you provide a source so I could read more into depth?
Hi Martin -
Down load white paper here in .pdf format -
https://deliverypdf.ssrn.com/delivery.ph...INDEX=TRUE
Wealth Creation in the U.S. Public Stock Markets 1926 to 2019 - Hendrik Bessembinder, Department of Finance, W.P. Carey School of Business
* Exhibit 1 Page 17: depicts the Top 50 Firms that contributed to overall wealth creation (Measured as of December 31, 2019)
* Exhibit 2: Page 18 depicts lifetime wealth creation to shareholders in aggregate, by Industry. (Measured as of December 31, 2019)
* Exhibit 4: Page 20 depicts Shareholder Wealth Creation, Measured as of initial study in 2016 and updated in 2019.
- Scoot
"Fight your fights, find the grace,in all the things that you can't change, and help somebody if you can" - Van Zant
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Thanks, Scoot,
also for the exhibit shortcuts.
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