Commentary
Just recently, Bank of America had a great piece of analysis on the “5 Lessons From the Nifty Fifty.” Of course, if you are unfamiliar with the importance of the “Nifty Fifty,” it is worth explaining.
The “Nifty Fifty” refers to the 50 most popular large-cap stocks in the 1960s and 1970s. These “household” names traded at extreme valuations and included household names such as Xerox, IBM, Polaroid, and Coca-Cola. Many of these Nifty Fifty stocks had price-to-earnings (P/E) ratios as high as 100 times earnings. However, investors piled into these companies at the time due to their proven growth records and continual increases in dividends as inflation weighed on everything else….