Nifty Fifty

This article refers to an informal investing term. For the Indian stock index, see S&P CNX Nifty. For the motor scooter, see the Honda Spree. For the Canon lens, see EF 50mm f/1.8 II.

Nifty Fifty was an informal term used to refer to 50 popular large cap stocks on the New York Stock Exchange in the 1960s and 1970s that were widely regarded as solid buy and hold growth stocks.

The fifty are credited with propelling the bull market of the early 1970s. Most are still solid performers, although a few are now defunct or otherwise worthless.

The long bear market of the 1970s that 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.^[1]

Because of the under-performance of most of the nifty fifty list, it is often cited as an example of unrealistic investor expectations. However, those who held on until the late 1990s bull market when many of the stocks return to market valuations.^[2]

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 ratios. Fifty times earnings was not uncommon.

NIFTY means National Index for Fifty

NYSE Nifty Fifty constituents

Note: There is no official version of companies comprising the list.^[1]

• American Express
• American Home Products
• American ly Corp.
• AMP Inc.
• Anheuser-Busch
• Avon Products
• Baxter International
• Black & Decker
• Bristol-Myers
• Burroughs Corporation
• Chesebrough-Ponds
• The Coca-Cola Company
• Digital Equipment Corporation
• Dow Chemical
• Eastman Kodak
• Eli Lilly and Company
• Emery Air Freight
• First National City Bank
• General Electric
• Gillette
• Halliburton
• Heublein Brewing Company
• IBM
• International Flavors and Fragrances
• International Telephone and Telegraph
• J.C. Penney
• Johnson & Johnson
• Louisiana Land and Exploration
• Lubrizol
• Minnesota Mining and Manufacturing (3M)
• McDonald's
• Merck & Co.
• MGIC Investment Corporation
• PepsiCo
• Pfizer
• Philip Morris Cos.
• Polaroid
• Procter & Gamble
• Revlon
• Schering Plough
• Joe Schlitz Brewing
• Schlumberger
• Sears, Roebuck and Company
• Simplicity Pattern
• Squibb
• S.S. Kresge
• Texas Instruments
• Upjohn
• The Walt Disney Company
• Xerox

References

1. ^ ^{a b} Fesenmaier, Jeff. "The Nifty-Fifty Re-Revisited". http://economics-files.pomona.edu/GarySmith/Nifty50/Nifty50.html 
2. ^ Siegel, Jeremy. "Valueing Growth Stocke: Re-Revisiting the Nifty-Fifty". http://www.aaii.com/journal/article/valuing-growth-stocks-revisiting-the-nifty-fifty