Unhedged Best of: the world’s greatest stocks
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Nov 28, 2024 Robin Wigglesworth, Head of the FT's Alphaville blog, dives into the astonishing findings of Professor Hendrik Bessembinder's research on stock market performance. Discover how one stock boasted a staggering 265,528,900 percent return, while others like Kansas City Southern showcased historic wealth compounding. The hosts discuss the contrasting capital intensity of railways versus today's tech giants, and debate the merits of active stock picking versus passive investing. Get insights into enduring stocks and the quirky world of niche financial products!
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Identifying Bad Stocks
- Avoid hype-driven stocks like GameStop, AMC, and Bed Bath & Beyond.
- Focus on companies with strong fundamentals.
The Power of Compounding
- Long-term compounding at a moderate rate (e.g., 15% annually) yields massive returns over time.
- Boeing's long-term success demonstrates the power of consistent growth, even with occasional setbacks.
Capital-Intensive vs. Capital-Light
- Surprisingly, capital-intensive businesses like Boeing and General Dynamics have generated high long-term returns.
- Tech stocks, known for being capital-light, are typically associated with high growth.