The Nifty Fifty: Forty-Three Years Later

In 1972, the Morgan Guaranty Trust (in conjunction with a few other investment advisory companies) launched an advertisement push called the “Nifty Fifty” that proclaimed certain American companies were so dominant, they should be purchased and never sold. The intuitive appeal of this argument was obvious—people will always need food, beverages, medicine, and so on—and the companies included on the list all had excellent records of making shareholders rich, with the popular terminology at the time calling them “blue-chip stocks” rather than “dividend growth stocks.”

But there was a problem with the timing of this list: many of the companies were trading at lofty valuations that have only been seen three times in American history (the late 1920s and late 1990s being the others) with Coca-Cola trading at 48x profits, Johnson & Johnson trading at almost 60x profits, McDonald’s trading at 71x profits, and so on. Here, in a moment … Read the rest of this article!