Translated material
How to find superhand on a long horizon
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The search for shares that can bring to investors high profitability on a long horizon remains a difficult task. Recent studies show that only a small part of the companies brings a significant part of the income. How can these companies find and is it worth trying to do it?
What's happened
The main event for the market markets was not even a performance by the head of the Fed Jerome Powell at the symposium of central banks in Jackson-Houl, and the NVIDIA report, through the prism of which markets, is looking at the development of artificial intelligence technology.
The results of the NVIDIA over the past quarter fully justified the expectations of analysts, but the markets did not like the forecast for the current quarter, as well as the news that the new Blackwell processor line was more difficult to manufacture than expected. After the report of the company's shares at the post -marke, the company's shares decreased by 8%. However, now it is hardly changing the long-term NVIDIA investmentkeys, the capitalization of which has grown by $ 3 trillion since November 2022. Now the profitability of its sales is five times higher than the similar indicator for all companies from the S&P 500 index.
Between the indicators of profitability and the assessment of the company are a direct connection. The success of NVIDIA, as it is seen now, raises the question before the investors: how to find such promotions that will bring on a long horizon if not hundreds, as in the case of the manufacturer of chips for AI, then at least tens of percent per year.
In reality, this is extremely difficult to do. Handrika School of Business, who was published in July, Henderrik’s Henderrika from the University of Arizona, showed that 52% of 29 thousand companies selling American exchanges between 1926 and 2023 brought the investors losses during the exchange. Therefore, while the average cumulative profitability from investments in the action is 22,840%, the median result is a loss of 7.4%.
Bessembinder conducts similar research on long intervals regularly, they are quoted by leading Western business media all the time. One of the past studies based on data on 26 thousand companies entering the exchange between 1926 to 2016 showed that more than half of them brought negative yield or showed the worst results than the same treasury bills (proxies to the funds of the monetary market, or cache). About 1000 shares - or only 4% of the entire sample - provided the entire pure increase in wealth for this period, and this is almost $ 35 trillion.
Companies that have created the greatest wealth in the markets, for the most part are companies that dominate today. This is not surprising, taking into account the fact that the world economy and markets continue to grow. Nevertheless, the unusually high concentration of the profitability that Bessembinder fixes reflects the fact that the profitability of the shares is far from the normal distribution. Therefore, probably, we should not be surprised that several companies determine the general direction of the market movement.
In 2019, the investment company Baillie Gifford, which is known for its bets on fast -growing companies, hired a Bessembinder as a consultant and funded his global study conducted in the same year. Based on the data for 1990-2018, it showed that the skew in the profitability of shares at the international level was even more extreme: about 61% of the shares gave profitability worse than the treasury bills and less than 1% of them provided all $ 16 trillion of pure capital growth during this period.