From 1972 to 2001, returns for these stocks were significantly lower than for the S&P 500. These 24 stocks are included in the two best-known lists. Because the Nifty Fifty was not an official index, its exact composition has been the subject of debate. The consensus on this was so clear that even defensive fund managers had difficulty justifying themselves when they were not (or no longer) invested in these stocks. The belief that kept the trend going was that the fact they were expensive was practically irrelevant, because the high level of growth would sooner or later justify any valuation. In fact, many analysts believed that the outlook for these stocks was so good that prices could only go up. These stocks were therefore also called "one-decision stocks", or in other words, stocks that you buy once and never sell.
In addition, they had increased their dividends often since the end of the Second World War. They had strong balance sheets and earnings, and attractive growth rates. The Nifty Fifty were established companies in their sectors. Nifty Fifty: Beware, risk of confusion! One-decision stocks But there is consensus on 24 stocks (see table below). The list of the Nifty-Fifty stocks popular during that time differs depending on the source. Among these were companies such as Coca-Cola, IBM, Johnson & Johnson, McDonald’s and Walt Disney. In order to combine security and returns to the greatest extent possible, an increasing number of investors started to invest in the stocks of large companies that dominated their market while at the same time reporting high growth rates. In their search to preserve wealth and achieve positive real returns, many believed this was where they would find worthwhile investments.
Investors were, however, open to the stock market. Investing in gold as an alternative was not an option at all, because private ownership thereof was prohibited in the US until December 1974. Government bonds, on the other hand, were viewed with skepticism by investors due to the debt issue, even though absolute returns were around five percent. At that time, private ownership thereof was prohibited. In the mid-1960s, it wasn’t possible to turn to gold as a safe investment.
Many feared inflation, and therefore focused on investments that promised to ensure stable value. Due to the Vietnam War, national debt in the US during the mid- to late 1960s was a cause of great concern among investors. As with many investment trends, historical developments facilitated the emergence of the boom of the so-called Nifty Fifty.
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