Nope. It’s Altria (MO), the cigarette company.
Related: How much money do you need for retirement
Red hot returns: Credit Suisse published a report this week on the performance of every major American industry from 1900 to 2010.
One dollar in the average American industry was worth $38,255 by 2010. That’s an annual return of about 10% per year. Some did far better: $1 invested in food companies was worth about $700,000 by 2010. Chemical and electrical equipment companies returned about the same.
Then there’s tobacco, which was in a league of its own.
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Boring is beautiful: Companies that make the same product today they did 50 years ago are different. They don’t innovate, but they don’t have to. It’s a boring business, but it can be beautiful for shareholders because it keeps the companies chugging along for decades, if not centuries.
The ridiculously large gains from compound interest occur at long holding periods. The key to building wealth isn’t necessarily high returns, but mediocre returns sustained for the longest period of time. You typically find that in boring companies that don’t innovate, and sell the same products today that they did 50 years ago, and will likely be selling 50 years from now. Food, soap, toothpaste and, yes, cigarettes are good examples.
Morgan Housel owns shares of Altria and Philip Morris International. The Motley Fool recommends and owns shares of Apple. The Motley Fool has a disclosure policy.
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