The lessons from the Nifty Fifty. Are we repeating the same mistakes of the past‪?‬ Finance & Fury Podcast

Welcome to Finance and Fury. Today’s episode is lessons from the nifty fifties – bit of a history lesson as well as looking back to lessons that can be learnt from this, to help not make mistakes of the past.
This is a particular bubble and market correct that most people wouldn’t be familiar with – especially when compared to the 1929, 1989, or 2008 crashes which were more world wide or a complete systematic risk
This mini-bubble occurred in the US back in the 1970s –
the term Nifty Fifty is an informal designation that was given for fifty popular large-cap stocks on the NYSE These shares were particularly popular in purchases between the 1960s and early 1970s This basket of shares was widely regarded as solid buy and hold growth stocks – they were essentially Blue-chip stocks - your large companies that were considered lower risk The group included names like Revlon, Procter & Gamble, Philip Morris, Pepsi, Pfizer, Merck & Co, Eli Lilly, Coca-Cola, IBM, Gillette, Wal-Mart, Disney, Eastman-Kodak, Xerox and Polaroid – a lot of these are still household-names today, although some, like Eastman-Kodak are no more Some academics credit these fifty shares as being the primary reason the US had a bull market of the between the 60s and early 1970s – But this then turned into a subsequent crash and underperformance of the market through the rest of the 70s and into the early 1980s It is interesting – because when you look at a market/index – depending on the weighted allocation of a basket of shares – the performance of the top 50 large shares on an index that has thousands of shares listed on it is more important than all of the other shares combined As an example – think about the ASX – the top 50 companies make up between 70- 75% of the market cap of the index If these shares have a negative 10% return, but the remaining 2,700 shares have a positive 10% return, results in a negative 5% return to the index – due the weighting of the index – where what is most important is that the companies that make up the most of it perform well Where this gets even more concentrated is on an index like the NASDAQ –55% of the index weighting is held in 10 companies – Apple, Microsoft, Amazon, Tesla, FB, Alphabet A & C, Nvidia, paypal and comcast NASDAQ has done pretty well over the past 10 years – thanks to the rise of companies like Apple, amazon and tesla – Similar dynamics were playing out back in the 60s – thanks to a handful of shares -the NYSE rose significantly We will go through what happened in detail – but it is an example of what may occur following a period during which many new investors start joining the markets, which are then influenced by a positive market sentiment, providing a feedback from further positive returns, ignoring fundamental market valuation metrics in the short term – then a trigger catalysis occurs and the house of cards crashes down  
Starting at the beginning - the most common characteristic by the companies in the nifty fifty could be described as investor optimism -  
Looking back in time on the Go-Go Years
The 1960s were buoyant years for the US economy and stock market. From the mid-60s the term ‘go-go’ was used to describe an aggressive way of operating in the stock market, which involved trading for quick profits. Many of these companies were either providing solid earnings growth, or there was the expectations of solid earnings growth in the future This attracted a lot of attention and new Investors came to the market This is actually a key feature of the 1960s that could be easily overlooked – and that is that there was a massive increase in the number of investors in the US stock market Seven times as many Americans held shares by the end of the 1960s when compared to 20-30 years earlier - In the summer of 1970, the US Stock Exchange unveiled a survey showing the country had over 30 million shareholders – p