The numbers are through December 31, 2025 so with MSFT in a bear market, GOOG getting hit by recent AI researcher defections, AMZN and NVDA being down over 10% this year, all while the S&P 500 trades just under new highs, the percentage of all wealth creation has shifted (slightly) away from the Magnificent 7. But not all that much.
Past performance is no guarantee...your mileage may vary...close cover before striking...etc.
From the New York Times, June 26:
Best Investments Over the Last 100 Years? Almost All Are Tech Companies.
What’s most surprising is that Tesla and SpaceX have entered that elite group. A vast majority of companies weren’t worth owning, a long-running study shows.
When you step back and look at the stock market over the last 100 years, what you will find is that a tiny group of publicly traded companies has accounted for nearly all of the profits for investors over the entire century.
Most of the top performers are tech companies, headed by Apple, Nvidia and Microsoft. What’s startling is that both Tesla and, if only briefly, SpaceX, two of Elon Musk’s companies, have muscled their way onto that list of superb performers.
While these elite stocks churned out spectacular returns, more than 96 percent of the stock market did virtually nothing for investors over long periods. This vast majority of stocks couldn’t even match the 3.3 percent average return of one-month Treasury bills — basically, the return you could get month-by-month over those 100 years, without taking any appreciable risk.
These findings come from the latest update to a long-running study by Hendrik Bessembinder, a finance professor at Arizona State University who has provided a trove of essential and provocative data about stock market investing. The study has aimed to ferret out long-term wealth creators since 1926, when the data available to Professor Bessembinder begins. The rise of the tech giants, and the relative decline of every other sector of the market, has radically changed the rankings over the last decade, and over shorter periods as well.
For example, Tesla didn’t make the list of top wealth creators nine years ago, when an earlier version of the study ended. The firm now ranks ninth among all publicly traded companies over the century. Even more striking, when Professor Bessembinder ran the numbers at my request on June 16, a few days after SpaceX’s initial public offering, the company made the top 30 all-time list, though its falling share price has since moved it out of that rarefied world.
“We’ve had very high returns for extraordinarily large firms in recent years, and the first few days of SpaceX as a public company were a case study of that,” he said. “To me, the most striking thing over the last nine years is that not only is wealth creation highly concentrated in just a few companies, but that the trend has been accelerating.”
The Implications
Back in 2017, I wrote about the first version of Professor Bessembinder’s work on investing. It showed then that the obstacles facing individual stock pickers were formidable. Most companies’ shares failed to outperform basic Treasury bills. A small proportion of great performers buoyed the entire market, but knowing in advance which stocks would be the winners was a difficult feat.So I concluded that for a great majority of investors, it was much less risky to avoid stock picking entirely and instead invest with diversified low-cost mutual funds, particularly index funds mirroring the entire market.
But Professor Bessembinder’s findings also made it clear that there were vast riches to be made for those skilled or lucky enough to make the right choices: If you picked the very best performers, and avoided most losers, you would do extraordinarily well.
Those two insights remain true today, and perhaps even more so. I still think most people will be better off buying a small part of the entire stock market, a practice that I continue to follow myself. But the potential for gaining enormous wealth tempts millions of investors who scoop up shares of hot individual stocks like SpaceX. You will have to decide what’s best for you.
Defining Terms
In the first study, Exxon Mobil was the top performer from 1926 through 2016, followed by Apple, Microsoft, General Electric, IBM, Altria Group, Johnson & Johnson, General Motors and Walmart. That list depicted a diverse mosaic of the economy, with old companies dominating, aside from two upstarts, Apple and Microsoft, which had I.P.O.s in the 1980s.Now Professor Bessembinder has 100 years of data, with returns from 1926 through December.
Just to put the SpaceX I.P.O. in perspective, he has updated the returns, applying the same methods he has used for all publicly traded stocks tracked over the last century. His approach accounts for stock dividends and buyouts, and the comparison with Treasury bills includes an inflation adjustment.
“Lifetime wealth creation,” as Professor Bessembinder defines it, is connected not just to share performance but also to a company’s total market valuation. This means that an increase of 10 percent in the share price for a giant has a far greater effect on total wealth creation than a 10 percent increase by a company with a small value in the market.
That’s important because tech companies have become giants, including SpaceX, which has been publicly traded only since June 12 but has a market capitalization of more than $2 trillion. When tech shares make big moves, 100 years of market returns need realignment.
An Entire Century
The economy has changed in the nine years since the first study. More than ever before, the pack of leaders is dominated by tech stocks, with only two traditional companies, Exxon Mobil and Walmart, remaining in the top 10 for the entire century.Here are the leaders from 1926 through December, including their lifetime wealth creation and the percentage of the $91 trillion in total stock market wealth for which each was responsible...
....MUCH MORE
Here's Professor Bessembinder's latest paper at the Social Science Research Network:
One Hundred Years in the U.S. Stock Markets
Abstract
This study summarizes investment outcomes for 29,754 common stocks listed on the public U.S. stock markets over the 100-year period from 1926 to 2025, reporting on both compound (buy-and-hold) percentage returns and shareholder wealth enhancement measured in dollars. While the cross-stock mean buy-and-hold return is over 30,000%, the median is -6.9%. Shareholders’ wealth was enhanced by $91 trillion over the century, but long-term investors in nearly 60% of stocks incurred wealth reductions. The degree to which wealth creation is concentrated in a few firms has increased sharply in recent years. Over the 1926 to 2016 period studied in Bessembinder (2018), 89 firms accounted for half of the $43 trillion in net wealth creation. After including outcomes for the most recent nine years, just 46 firms account for half of the $91 trillion in net wealth creation over the full century.
....MUCH MORE (SSRN download or view-in-browser page)
