Fun With Charts!

If you think investing is simply putting all your money into large-cap stocks, or mega-cap stocks, think again. As the chart above shows, the largest of companies are, over time, surpassed by companies whose names you may not know or who don’t even exist yet. As the chart above¹ shows, the names that Baby Boomers knew as they aged have fallen to the wayside while newer companies have taken their places.

To reinforce the comments above, look at the performance of the biggest stocks over time². “From 1927 to 2025, the average annualized return for these stocks over the three years prior to joining the Top 10 was more than 25% higher than the market. Five years after joining the Top 10, these stocks were, on average, underperforming the market…”

While the average gain in the S&P 500 is approximately 10%, as measured over the past 100 years or so, the chart above³ demonstrates a 10% annual gain for the S&P 500 is almost non-existent. Rather, market returns are widely varied; up 75% of the time, while down the other 25%. Of note, “About three-quarters of the down years were followed by up years. The most recent example: a 19.8% loss in 2022 followed by a 26.6% gain in 2023.” 

1 “Top 10 Companies by Decade,” Slide 9, Guide to the Markets, J.P. Morgan. September 30, 2026.
2 Dimensional Quick Takes, “Think Twice About Chasing the Biggest Stocks,” 2026. 
3 Dimensional Quick Takes, “The Rewarding Distribution of US Stock Market Returns”, 2026.

S.F. Ehrlich Associates, Inc. (“SFE”) is a registered investment advisory firm in New Jersey that offers investment advisory, financial planning, and consulting services to its clients, who generally include individuals, high net worth individuals, and their affiliated trusts and estates. Additional disclosures, including a description of our services, fees, and other helpful information, can be found in our Form ADV Part 2, which is available upon request or on the SEC's website at www.adviserinfo.sec.gov/firm/summary/121356.

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This newsletter is for informational purposes only and is not intended to be and does not constitute specific financial, investment, tax, or legal advice.  It does not consider the particular financial circumstances of any specific investor and should not be construed as a solicitation or offer to buy or sell any investment or related financial products.  We urge you to consult with a qualified advisor before making financial, investment, tax, or legal decisions.

Information contained herein has been obtained from sources believed to be reliable. While we have no reason to doubt its accuracy, we make no representations or guarantees as to its accuracy.  The opinions and analyses expressed herein constitute judgments as of the date of this newsletter and are subject to change at any time without notice.  Any decisions you make based upon any information contained in this newsletter or otherwise are your sole responsibility. 

No graph, chart, formula, or other device can, in and of itself, be used to determine which securities to buy or sell, or when to buy or sell such securities, or can assist persons in making those decisions. 

Any securities mentioned in this newsletter are for illustrative purposes only and should not be construed as investment advice or a recommendation to buy or sell. There is no guarantee that a particular client's account will hold any or all of the securities mentioned in this newsletter. Additionally, from time to time, SFE’s officers, directors, employees, agents, affiliates, or client accounts may hold positions or other interests in the securities mentioned in this newsletter. 

Any historical index performance provided herein is for illustrative purposes and includes the reinvestment of dividends and income, but does not reflect advisory fees, brokerage commissions, and other expenses associated with managing an actual client account. An index is an unmanaged group of stocks considered to be representative of different segments of the stock market in general. Index performance does not represent actual account performance. One cannot invest directly in an index. A description of each index mentioned in this newsletter is available upon request.

Any hypothetical performance shown or discussed herein is for illustrative purposes only.  Hypothetical performance results have inherent limitations, including: they are generally prepared with the benefit of hindsight; do not involve financial risk or reflect actual trading; and do not reflect the economic and market factors, such as concentration, lack of liquidity or market disruptions, trading costs, and other conditions, that might have impacted our decision-making when managing actual client accounts. Since trades have not actually been executed, hypothetical performance results may have under- or overcompensated for the impact, if any, of certain market factors. 

It should not be assumed that future performance of any specific investment, investment strategy, or index (including any discussed in this presentation) will be successful or profitable or protect against loss. 

Any forward-looking statements or projections herein are based on assumptions. By their nature, forward-looking statements involve a number of risks, uncertainties, and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. You should not place undue reliance on forward-looking statements, which reflect our judgment only as of the date this newsletter was published.