all the profits from my own portfolio is from Apple stock, even though i also own, Amazon, Tesla, Arm and so on.
No! That is different.
These are public companies, and the fact you are seeing amazing share price growth from Apple is an exception.
Usually[1] on the public share market you'll see growth rates of ~8% pa, with some slightly above that and some below that.
The continued rapid rise in Apple's share price in exceptional, and is having an effect on your portfolio that is unlikely to be seen again in our lifetime.
That is completely different to pre-A-round investing, where it is expected to see (say) 1% of companies return 1000%.
TLDR; Apple is an exception. Don't think PG's essay applies to public markets.
[1] "Usually" in the sense of the pre-2008 sharemarket.
Do you have more data on this? I just did some quick searching, but couldn't find any firm numbers for what the 99th percentile return for individual public companies actually is. I certainly wouldn't be surprised if it was 1000% per year at some point in the tail, if not at 1% then for the top .01 percent of companies. I'd love if you could point to a graph of the tail so I can recalibrate.
Here's some links on average returns for the Dow Jones (ie, top public companies in the US): [1][2]
I certainly wouldn't be surprised if it was 1000% per year at some point in the tail, if not at 1% then for the top .01 percent of companies.
I'm having trouble parsing that sentence. I think you are saying that you think 1000% per year returns are normal for the top 0.1% of companies.
This is absolutely not the case. Even Apple (by far the best example of rapid share price growth in a large company) might, maybe manage to increase its share price 100% this year (low of ~$374 in Nov last year, currently at ~$662). That's exceptional - companies like Standard Oil, Exxon, etc never managed that.
(Occasionally you may get a smaller resource oriented company that fids oil, gold reserves or something and sees a 1000% increase. Or a small drug company that has a successful trial. These are very unusual too though, and more similar to VC investing that the typical public markets).
Here's some links on average returns for the Dow Jones (ie, top public companies in the US): [1][2]
I appreciate the links, but didn't find information about the extremes. What I'm looking for would be something more like this paper [1] on Extreme Value Theory but with more pretty pictures.
I got lost in this one soon after the introduction, but was interested in their statements "cross country evidence that the tail behaviour of returns is leptokurtic" and "the tail distribution is of the Fréchet type, hence fat-tailed". I was hoping for a cartoon graph showing just how fat that tail is.
I think you are saying that you think 1000% per year returns are normal for the top 0.1% of companies.
Essentially, but subtly different. Saying that I "wouldn't be surprised" was more to express the degree of my uncertainty than to state my belief. And I posited .01%, rather than .1%. To put numbers on it, it strikes me as plausible that 3 out of the 2700 listed Nasdaq issues would be up 10x for the year.
Occasionally you may get a smaller resource oriented company that fids oil, gold reserves or something and sees a 1000% increase. Or a small drug company that has a successful trial. These are very unusual too though
How unusual? I'd like to put a number on it. Is a gain of 10x over a year a 1 out of 1000 event, which would make it likely for a couple Nasdaq stocks a year? What about 100x returns over a larger number of years? I'd guess that it's happened at least a few times, but don't know.
My instinct would be that it's a fat tail, but not as fat as the VC market. Rather than hoping for 10x over 10 years (26% year-over-year) with carefully chosen startups, with a broad market index you'd probably lucky to hit 3x (12% compounded).
But what would the long term expected returns be for a broad portfolio of mining companies, pre-trial pharmaceuticals, and internet IPO's? And how would it compare to an average VC firm? I have no idea.
How unusual? I'd like to put a number on it. Is a gain of 10x over a year a 1 out of 1000 event, which would make it likely for a couple Nasdaq stocks a year?
I don't know, but the data is out there. You can buy the complete stock history of the Nasdaq fairly cheaply. If you only want day's end prices it might even be available for free.
A quick search found some links for best performing stocks per year[1][2], which indicates that 10x is rare enough that it only happens once every few years.
No! That is different.
These are public companies, and the fact you are seeing amazing share price growth from Apple is an exception.
Usually[1] on the public share market you'll see growth rates of ~8% pa, with some slightly above that and some below that.
The continued rapid rise in Apple's share price in exceptional, and is having an effect on your portfolio that is unlikely to be seen again in our lifetime.
That is completely different to pre-A-round investing, where it is expected to see (say) 1% of companies return 1000%.
TLDR; Apple is an exception. Don't think PG's essay applies to public markets.
[1] "Usually" in the sense of the pre-2008 sharemarket.