In the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
, the term Nifty Fifty was an informal designation for a group of roughly fifty
large-cap
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by t ...
stocks on the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
in the 1960s and 1970s that were widely regarded as solid
buy and hold Buy and hold, also called position trading, is an investment strategy whereby an investor buys financial assets or non-financial assets such as real estate, to hold them long term, with the goal of realizing price appreciation, despite volatilit ...
growth stocks, or "
Blue-chip" stocks. These fifty stocks are credited by historians with propelling the
bull market
A market trend is a perceived tendency of financial markets to move in a particular direction over time. Analysts classify these trends as ''secular'' for long time-frames, ''primary'' for medium time-frames, and ''secondary'' for short time-fram ...
of the early 1970s, while their subsequent crash and underperformance through the early 1980s are an example of what may occur following a period during which many investors ignore fundamental
stock valuation
In financial markets, stock valuation is the method of calculating theoretical values of companies and their stocks. The main use of these methods is to predict future market prices, or more generally, potential market prices, and thus to profit fr ...
metrics, to instead make decisions on popular sentiment.
Roughly half of the Nifty Fifty have since recovered and are solid performers, although a few are now defunct or otherwise worthless.
Investor
Howard Marks
Dennis Howard Marks (13 August 1945 – 10 April 2016) was a Welsh drug smuggler and author who achieved notoriety as an international cannabis smuggler through high-profile court cases. At his peak he claimed to have been smuggling consignmen ...
reports that about half of the Nifty Fifty "compiled respectable returns for 25 years, even when measured from their pre-crash highs, suggesting that very high valuations can be fundamentally justified." On the other hand, Professor
Jeremy Siegel
Jeremy James Siegel (born November 14, 1945) is the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania. Siegel comments extensively on the economy and financial markets. He ...
analyzed the Nifty Fifty era in his book ''
Stocks for the Long Run
''Stocks for the Long Run'' is a book on investing by Jeremy Siegel. Its first edition was released in 1994. Its fifth edition was released on January 7, 2014. According to Pablo Galarza of ''Money'', "His 1994 book ''Stocks for the Long Run'' se ...
'', and determined companies that routinely sold for P/E ratios above 50 consistently performed worse than the broader market (as measured by the
S&P 500
The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of D ...
) in the next 25 years, with only a few exceptions.
Characteristics
The stocks were often described as "one-decision", as they were viewed as extremely stable, even over long periods of time.
The most common characteristic by the constituents were solid earnings growth for which these stocks were assigned extraordinary high
price–earnings ratio
The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share (stock) price to the company's earnings per share. The ratio is used for valuing companies and to find out whether they are overvalued or under ...
s. Trading at fifty times earnings or higher was common, far above the long-term market average of about 15 to 20.
NYSE Nifty Fifty constituents
:Note: There is no official version of companies composing the list,
but the following companies were often included among the Nifty Fifty:
*
American Express
American Express Company (Amex) is an American multinational corporation specialized in payment card services headquartered at 200 Vesey Street in the Battery Park City neighborhood of Lower Manhattan in New York City. The company was found ...
*
American Home Products
Wyeth, LLC was an American pharmaceutical company. The company was founded in Philadelphia, Pennsylvania, in 1860 as ''John Wyeth and Brother''. It was later known, in the early 1930s, as American Home Products, before being renamed to Wyeth i ...
*
American Hospital Supply Corporation
*
AMP Inc.
*
Anheuser-Busch
Anheuser-Busch Companies, LLC is an American brewing company headquartered in St. Louis, Missouri. Since 2008, it has been wholly owned by Anheuser-Busch InBev SA/NV (AB InBev), now the world's largest brewing company, which owns multiple glo ...
*
Avon Products
Avon Products, Inc. or simply known as Avon, is an American-British multinational cosmetics, skin care, fragrance and personal care company, based in London. It sells directly to the public. Avon had annual sales of $9.1 billion worldwide in 2 ...
*
Baxter International
Baxter International Inc. is an American multinational healthcare company with headquarters in Deerfield, Illinois.
The company primarily focuses on products to treat kidney disease, and other chronic and acute medical conditions. The company ...
*
Black & Decker
Black+Decker Inc. is an American manufacturer of power tools, accessories, hardware, home improvement products, home appliances and fastening systems headquartered in Towson, Maryland, north of Baltimore, Maryland, USA, where the company was o ...
*
Bristol-Myers
The Bristol Myers Squibb Company (BMS) is an American multinational pharmaceutical company. Headquartered in New York City, BMS is one of the world's largest pharmaceutical companies and consistently ranks on the ''Fortune'' 500 list of the lar ...
*
Burroughs Corporation
The Burroughs Corporation was a major American manufacturer of business equipment. The company was founded in 1886 as the American Arithmometer Company. In 1986, it merged with Sperry UNIVAC to form Unisys. The company's history paralleled many ...
*
Chesebrough-Ponds
Pond's is an American brand of beauty and health care products, currently owned by Unilever.
History
Pond's Cream was invented in the United States as a patent medicine by pharmacist Theron T. Pond (1800–1852) of Utica, New York, in 1846. M ...
*
The Coca-Cola Company
The Coca-Cola Company is an American multinational beverage corporation founded in 1892, best known as the producer of Coca-Cola. The Coca-Cola Company also manufactures, sells, and markets other non-alcoholic beverage concentrates and syrups, ...
*
Digital Equipment Corporation
Digital Equipment Corporation (DEC ), using the trademark Digital, was a major American company in the computer industry from the 1960s to the 1990s. The company was co-founded by Ken Olsen and Harlan Anderson in 1957. Olsen was president unt ...
*
Dow Chemical
*
Eastman Kodak
The Eastman Kodak Company (referred to simply as Kodak ) is an American public company that produces various products related to its historic basis in analogue photography. The company is headquartered in Rochester, New York, and is incorpor ...
*
Eli Lilly and Company
Eli Lilly and Company is an American pharmaceutical company headquartered in Indianapolis, Indiana, with offices in 18 countries. Its products are sold in approximately 125 countries. The company was founded in 1876 by, and named after, Colonel ...
*
Emery Air Freight
*
First National City Bank
Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...
*
General Electric
General Electric Company (GE) is an American multinational conglomerate founded in 1892, and incorporated in New York state and headquartered in Boston. The company operated in sectors including healthcare, aviation, power, renewable energ ...
*
Gillette
Gillette is an American brand of safety razors and other personal care products including shaving supplies, owned by the multi-national corporation Procter & Gamble (P&G).
Based in Boston, Massachusetts, United States, it was owned by The Gil ...
*
Halliburton
Halliburton Company is an American multinational corporation responsible for most of the world's hydraulic fracturing operations. In 2009, it was the world's second largest oil field service company. It has operations in more than 70 countries ...
*
Heublein Heublein Inc. (also known as Heublein Spirits) was an American producer and distributor of alcoholic beverages and food throughout the 20th century. During the 1960s and 1970s its stock was regarded as one of the most stable financial investments ...
*
IBM
*
International Flavors and Fragrances
International Flavors & Fragrances is an American corporation that produces flavors, fragrances, and cosmetic actives, which it markets globally. It is headquartered in New York City and has creative, sales, and manufacturing facilities in 44 di ...
*
International Telephone and Telegraph
ITT Inc., formerly ITT Corporation, is an American worldwide manufacturing company based in Stamford, Connecticut. The company produces specialty components for the aerospace, transportation, energy and industrial markets. ITT's three businesse ...
*
JCPenney
Penney OpCo LLC, doing business as JCPenney and often abbreviated JCP, is a midscale American department store chain operating 667 stores across 49 U.S. states and Puerto Rico. Departments inside JCPenney stores include Mens, Womens, Boys, Gir ...
*
Johnson & Johnson
Johnson & Johnson (J&J) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. Its common stock is a component of the Dow Jones Industrial Average and the company i ...
*
Louisiana Land & Exploration
*
Lubrizol
The Lubrizol Corporation is an American provider of specialty chemicals for the transportation, industrial and consumer markets. These products include additives for engine oils and other transportation-related fluids, additives for industrial l ...
*
Minnesota Mining and Manufacturing
3M (originally the Minnesota Mining and Manufacturing Company) is an American multinational conglomerate operating in the fields of industry, worker safety, U.S. health care, and consumer goods. The company produces over 60,000 products unde ...
(3M)
*
McDonald's
McDonald's Corporation is an American Multinational corporation, multinational fast food chain store, chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechri ...
*
Merck & Co.
*
MGIC Investment Corporation
MGIC Investment Corporation ("MGIC") is a provider of private mortgage insurance in the United States. The company is headquartered in Milwaukee, Wisconsin.
In addition to mortgage insurance, MGIC provides lenders with various underwriting and ...
*
PepsiCo
PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase. PepsiCo's business encompasses all aspects of the food and beverage market. It oversees the manuf ...
*
Pfizer
Pfizer Inc. ( ) is an American multinational pharmaceutical and biotechnology corporation headquartered on 42nd Street in Manhattan, New York City. The company was established in 1849 in New York by two German entrepreneurs, Charles Pfizer ...
*
Philip Morris Cos.
*
Polaroid
Polaroid may refer to:
* Polaroid Corporation, an American company known for its instant film and cameras
* Polaroid camera, a brand of instant camera formerly produced by Polaroid Corporation
* Polaroid film, instant film, and photographs
* Polar ...
*
Procter & Gamble
The Procter & Gamble Company (P&G) is an American multinational consumer goods corporation headquartered in Cincinnati, Ohio, founded in 1837 by William Procter and James Gamble. It specializes in a wide range of personal health/consumer hea ...
*
Revlon
Revlon, Inc. is an American multinational company dealing in cosmetics, skin care, fragrance, and personal care. The headquarters of Revlon was established in New York City on March 1, 1932, where it still remains. Revlon was founded by brothe ...
*
Schering Plough
Schering-Plough Corporation was an American pharmaceutical company. It was originally the U.S. subsidiary of the German company Schering AG, which was founded in 1851 by Ernst Christian Friedrich Schering. As a result of nationalization, it beca ...
*
Joseph Schlitz Brewing Company
The Joseph Schlitz Brewing Company was an American brewery based in Milwaukee, Wisconsin, and once the largest producer of beer in the United States. Its namesake beer, Schlitz (), was known as "The beer that made Milwaukee famous" and was adve ...
*
Schlumberger
Schlumberger Limited (), doing business as SLB, is an oilfield services company. Schlumberger has four principal executive offices located in Paris, Houston, London, and The Hague.
Schlumberger is the world's largest offshore drilling compa ...
*
Sears, Roebuck and Company
Sears, Roebuck and Co. ( ), commonly known as Sears, is an American chain of department stores founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck and reincorporated in 1906 by Richard Sears and Julius Rosenwald, with what began a ...
*
Simplicity Pattern The Simplicity Pattern Company is a manufacturer of sewing pattern guides, under the "Simplicity Pattern", "It's So Easy" and "New Look" brands. The company was founded in 1927 in New York City. During the Great Depression, Simplicity allowed home s ...
*
Squibb
*
S.S. Kresge
Sebastian Spering Kresge (July 31, 1867 – October 18, 1966) was an American businessman. He created and owned two chains of department stores, the S. S. Kresge Company, one of the 20th century's largest discount retail organizations, and the ...
*
Texas Instruments
Texas Instruments Incorporated (TI) is an American technology company headquartered in Dallas, Texas, that designs and manufactures semiconductors and various integrated circuits, which it sells to electronics designers and manufacturers globall ...
*
Upjohn
The Upjohn Company was a pharmaceutical manufacturing firm founded in 1886 in Hastings, Michigan, by Dr. William E. Upjohn who was an 1875 graduate of the University of Michigan medical school. The company was originally formed to make ''friabl ...
*
The Walt Disney Company
The Walt Disney Company, commonly known as Disney (), is an American multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios complex in Burbank, California. Disney was originally founded on October ...
*
Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
*
Xerox
Xerox Holdings Corporation (; also known simply as Xerox) is an American corporation that sells print and electronic document, digital document products and services in more than 160 countries. Xerox is headquartered in Norwalk, Connecticut (ha ...
U.S. bear market of the 1970s
The long bear market of the 1970s which began with the
1973–74 stock market crash and lasted until 1982 caused valuations of the nifty fifty to fall to low levels along with the rest of the market, with most of these stocks under-performing the broader market averages. A notable exception was Wal-Mart, the best performing stock on the list, with a 29.65% compounded annualized return over a 29-year period.
However, Wal-Mart's
initial public offering
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
was in 1970 and only started trading on the NYSE on August 25, 1972, at the end of the bull market.
Peter Lynch
Peter Lynch (born January 19, 1944) is an American investor, mutual fund manager, and philanthropist. As the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Lynch averaged a 29.2% annual return, consistently more th ...
and John Rothchild (1993). One Up on Wall Street. Simon & Schuster, p. 158
Because of the under-performance of most of the nifty fifty list, it is often cited as an example of unrealistic investor expectations for growth stocks.
References
{{Reflist
Stock market
Economic bubbles
History of stock exchanges in the United States