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The Nifty Fifty

Bears/1972 · Siegel vs Fesenmaier and Smith · 3 sources · data as of 1 Aug 2026

In the early 1970s a group of large American growth companies got treated as a single decision. Buy them, hold them, do not worry too much about the price. They were called the Nifty Fifty, and by December 1972 they traded at an average of 41.9 times earnings while the S&P 500 sat at 18.9. Then the index fell 48.2% over the next two years.

The story usually gets told as a tidy morality tale about paying too much for quality. That version does not survive contact with the research. Two peer reviewed studies looked at what happened afterwards and reached opposite conclusions. Jeremy Siegel measured to August 1998 and found the group essentially matched the market. Fesenmaier and Smith measured a different list to December 2001 and found investors ended with half the wealth of an index buyer. Neither is sloppy work. They used different lists, because there was never an official one, and they stopped the clock at different moments, one shortly before the technology crash and one shortly after. The endpoint decides the answer, and that is the most useful thing on this page.

So what you get here is both cases laid out with their numbers, the list problem explained, and a note on where the two studies disagree about individual P/E ratios by as much as 21%. Both papers are linked at the bottom and both are readable. If you take one thing away, make it that the conclusion moved with the measurement rather than with the facts.