2 shocking Dow charts illustrating the power of long-term investment | Smart Change: Personal Finance

(Daniel Foelber)

The dream of many investors is to find companies they can buy and hold for 30 years or longer. The ability to put together gains over time is a powerful concept that can lead to life-changing wealth. The effect is amplified with a stable savings paired with long-term investments.

Let’s take a look at 15 stocks that are currently in Dow Jones Industrial Average or been in the Dow for most of the last 15 years and looking at their gains over time. Through this exercise, you may be surprised to find out which companies have outperformed or underperformed the S&P 500 over the last 30 years.

Image Source: Getty Images.

Why it is so challenging to beat the stock market

Let’s go back in time to April 1992. Walt Disney‘s (NYSE: DIS) Aladdin would be released later that November, followed by Lion King and The Jungle Book in 1994, Pocahontas and Toy Story in 1995, 101 Dalmatians in 1996, Hercules in 1997, The life of a bug and Mulan in 1998, and Tarzan and Toy Story 2 in 1999, and saw many more feature films. In many ways, this was the beginning of Disney’s true heyday. It had just opened Hollywood Studios in 1989, wanted to open Animal Kingdom in 1998, it had not yet bought Pixar, and it was still decades away from buying Marvel or Star wars. And yet, despite all that growth ahead, Disney stock has still underperformed the S&P 500 over the past 30 years.

DIS Total Return Level data by YCharts

Coca Cola‘s (NYSE: KO) the global reach grew significantly over the last 30 years as it added more brands and established soda fountains in both restaurants and fast food chains. And yet it also underperformed the S&P 500.

ExxonMobil (NYSE: XOM) had not yet experienced the shale revolution and the booming oil and gas market of the 2000s and early 2010s. Even considering the oil and gas market in 2021 and 2022, Exxon is still an underperformer in this 30-year period and it is no longer part of the Dow.

We all know the story of General Electric (NYSE: GE) and International business machines (NYSE: IBM). But that story is only clear in hindsight, and was not obvious 30 years ago. In the early 90s, these two companies were unsurpassed. No one knew how far GE would over-expand, or that IBM would fail to enter the PC market. These failures are a major reason why these companies have underperformed and why GE was started out of the Dow.

And yet, all five companies have been producing incredible profits over the last 30 years. An investment in GE still yielded an almost seven times total return despite all the turbulence. The other four companies have all grown 10 times or better over the last 30 years. This is all to say that even if an investor does not beat the stock market, investing in good companies, even if they have their challenges, can still lead to some impressive wealth over time.

Upward potential

Now let’s look at some winners. Here is a chart of 10 Dow stocks that beat the S&P 500 over the last 30 years.

MCD Total Return Level data by YCharts

Now we all know the meteoric rise of Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL). But $ 15,000 invested in Mcdonald’s (NYSE: MCD), Nike (NYSE: AF)or Home depot (NYSE: HD) 30 years ago would have made you a millionaire today. Even companies as simple and a little obvious as Procter & Gamble (NYSE: PG) or Johnson & Johnson (NYSE: JNJ) easily outperformed the S&P 500. The lesson here is that diversification has its benefits and that there are winners from all sectors of the economy – many of whom are hiding in the open.


Volatility is simply par for the course when it comes to investing. All long-term winning stocks have undergone painful draws, many by 50% or more multiple times. Bear markets can be stressful and nerve-wracking. And when you’re in the teeth of someone like we are now, it can feel like there’s no way out.

In times like this, investors can take comfort in knowing that the hardest part of being a long-term investor is enduring bear markets. Nothing else comes close. But every bear market learns new lessons and builds perseverance. The good news is, it gets easier with time. In many ways, experiencing bear markets can be a good reminder that stocks are not just rising and the stock market is sensitive to short-term inputs. By sticking to companies with strong fundamentals and good balances, an investor can position himself to survive market crashes and let the long-term growth and prosperity of the economy work magic.

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JPMorgan Chase is an advertising partner for The Ascent, a Motley Fool company. Daniel Foelber holds positions at Walt Disney and has the following options: long January 2024 $ 100 calls at Nike, long January 2024 $ 100 calls at Walt Disney, long January 2024 $ 120 calls at JPMorgan Chase, long January 2024 $ 125 calls at Walt Disney, long January 2024 $ 145 call at Walt Disney, long July 2022 $ 145 call at Walt Disney, long June 2022 $ 170 call at Walt Disney, short January 2024 $ 150 call at Walt Disney, short July 2022 $ 150 call at Walt Disney, short June 2020 call at Walt Disney2 $ 17 Disney, and short May 2022 $ 125 call at Walt Disney. The Motley Fool holds positions in and recommends Apple, Home Depot, Microsoft, Nike and Walt Disney. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2024 $ 145 calls at Walt Disney, long March 2023 $ 120 calls at Apple, short January 2024 $ 155 calls at Walt Disney and short March 2023 $ 130 calls at Apple. The Motley Fool has a disclosure policy.

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