A Tale of Two Investors

​“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.” – Charles Dickens, the famous opening quote from the 1859 book, A Tale of Two Cities.

Eerily, this quote sounds like it could have been written yesterday.

At one point, A Tale of Two Cities was cited as the best-selling novel of all time. Dickens was a champion of the poor in his writings and in his life as he became the most popular novelist of his time. Astoundingly, his works have never gone out of print.

Growing up in England he lived in poverty, leaving school as a young boy to work in a factory to help support his family due to his father continually living beyond his means. His father eventually went to debtors' prison. Looking at his early life, most would never have predicted who he would eventually become, and the impact he would have.

Looking back over the past 10-years, for some investors, it was as Dicken’s wrote, it ‘was the season of Light…it was the best of times.”

What have the 5 best performing companies in the S&P 500 done over the last 10 years?

The top 5 performing stocks were:

1. Tesla (TSLA)
2. MarketAxess Holdings (MKTX)
3. Dexcom (DXCM)
4. Dominos Pizza (DPZ)
5. Abiomed (ABMD)

Doing a thought experiment, investing $10k into each company 10-years ago would have turned this combined $50,000 investment into over $2,800,000. A gain of 5,752% gain. It truly was, “the best of times” for these investors.


Conversely, how did the 5 worst performing companies in the S&P 500 do over the last 10 years?

1. Apache (APA)
2. NOV Holdings (NOV)
3. Devon Energy (DVN)
4. TechnipFMC (FTI)
5. Marathon Oil (MRO)

Investing $10,000 into each of these companies would have turned the $50,000 investment into less than $12,000, losing -$38,000. A whopping loss of -75% and a difference of over $2,838,000 in terminal wealth between these two investors. For these investors, “it was the worst of times.”

What can we learn from this?
Different investors can experience wildly different returns. Investing can be extremely rewarding and horribly painful over the exact same time-period.

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-Paul R. Rossi, CFA

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