Best of: the world’s greatest stocks

Jake (0:00)

Hey, listeners, this is Jake, I produce the show. Just a reminder, Rob and Katie and Aidan want to answer your markets and finance questions. So email them at unhedgedatft.com, and your question may end up in an episode. That's unhedgedatft.com. Also, we are taking the American holiday of Thanksgiving off. So this episode is a rerun, but you should listen anyway, because it's a good one.

Rob Armstrong (0:32)

Pushkin. Today on the show, we are going to talk about the greatest stocks of all time, the super duper stonks. But before we begin, Robin, here's a question for you. What is it that makes a great stock?

Robin Wigglesworth (0:52)

Well, you know, I talk to lots of really clever investors all the time, and I've learned how little I actually know, but I can tell you what's a bad stock. I can tell you what makes a terrible stock.

Rob Armstrong (1:03)

Tell me.

Robin Wigglesworth (1:04)

Well, you know, GameStop, AMC, Bed Bath & Beyond, this is going to get a lot of enmity in certain corners of the internet, but those are bad stocks. They're kind of cults masquerading.

Rob Armstrong (1:15)

Hype makes a bad stock. And I think what those stocks we're going to talk about today will prove your point in spades. This is Unhedged, the Markets and Finance podcast from the Financial Times. I'm Rob Armstrong coming to you from Unhedged World Headquarters in New York City. I'm joined today by Robin Wigglesworth, who's the head of the FT's Alphaville blog. Do we still call it a blog, Robin? What do we call it?

Robin Wigglesworth (1:43)

Yeah. We're a blog in spirit and substance, I feel. I will say blog. It's retro.

Rob Armstrong (1:49)

Today, we're talking about the greatest stocks of all time. The reason we're able to talk about this is because Hendrik Bessembinder, who's quite a famous academic, has released a new paper which discloses the stocks that have compounded wealth at the greatest rate over time. It's a bit of a surprising list. To be absolutely clear about what we're talking about here, these are the stocks which over the last century have generated the greatest returns in percent over the whole period. Am I getting that right, Robin?

Robin Wigglesworth (2:31)

Yeah, that sounds right to me.

Rob Armstrong (2:32)

Okay, so number five, quite ironically, given its recent history, Boeing and Co, a stock we associate with hilariously bad mistakes in its recent history, doors flying off of airplanes and all, the data goes back to 1934 and it has compounded, there's so many digits here, one, two, three, four, 21 million percent. Am I getting that right?

Robin Wigglesworth (3:01)

Yeah.

Rob Armstrong (3:01)

Yeah, 21 million percent. That is an annual compound return of just under 15 percent.

Robin Wigglesworth (3:08)

That's pretty incredible.

Rob Armstrong (3:09)

It is pretty incredible. That is a big number, but what's interesting to me about that, Robin, is if you have a stock that you love in your portfolio and it has a 15 percent year, you're not doing backflips with delight. I mean, that's a good year, but Nvidia lately is putting up hundreds of percent a year. The lesson here is putting up 15 percent a year again and again and again and again.

Robin Wigglesworth (3:37)

It's the stock market equivalent of the turtle, right? You compound that 15 percent over a very long period, the numbers just start looking astronomical over a period, like 21 million percent over, frankly, less than a century.

Rob Armstrong (3:52)

Yeah, over less than a century by doing 15 percent a year. And we were talking about this before. This is a bit the wisdom of people like Warren Buffett. You take a step back and you say, do I have a pretty good business here, a business that is in a position to generate in an average year above average returns and you just stick with it.

Robin Wigglesworth (4:13)

I write a lot about hedge fund managers that have made a bajillion percent in any given year and it's fun and it's sexy and it's exciting. But in reality, if you look at the people who have done best over time, they've just had lots of really good years over a long period of time, and that starts looking just godlike after 10 or 20 years.

Rob Armstrong (4:34)

It's the miracle of compounding and you don't blow up. You don't go to zero. Part of the magic of Boeing and the other four stocks we're going to talk about is continuing to exist is very powerful.

Robin Wigglesworth (4:47)

Don't go to zero is my top stock market tip basically.