The best stocks over the last century are tech firms

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.

- Jeff Sommer

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 into that list of superb performers.

While these elite stocks churned out spectacular returns, more than 96 per cent of the stock market did virtually nothing for investors over long periods. This vast majority of stocks couldn’t even match the 3.3 per cent average return of one-month Treasury bills.

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.

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 Bessembinder ran the numbers on June 16, a few days after SpaceX’s initial public offering (IPO), the company made the top 30 all-time list, though its falling share price has since moved it out of that rarefied world.

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.