The rise of Apple, Amazon, Alphabet, Facebook, and Microsoft over the most recent investment generation has led to perhaps an uneven view of American growth. From 2010 through 2020, the S&P 500 appeared to achieve top-line revenue growth of 6.7%. That was actually better than the post-WWII average of 6.2%.
But almost all of the revenue gains across the index came from these top five stocks. If you subtract the big five from the S&P 500, and only measured the top-line growth of the S&P 500 of the other 495 companies, you would only see top-line growth of 3.8%. From an investment perspective, it is quite difficult to get double-digit returns from a particular investment with revenue growth that barely exceeds inflation. Cost cuts, productivity gains, and share repurchases can only get you so far. The real wealth gets made by selling a meaningful amount of more stuff each year … Read the rest of this article!