Understanding the best performing stocks of the last five years can be tricky. On one hand, there’s no question that if you invested in them five years ago you made a killing. On the other hand, that doesn’t mean they’re the best stocks to invest in right now. Nevertheless, it’s still worth getting to know the top performers over a long period of time. That way you can understand more about what tends to do well in the stock market.
So, let’s take a look at a list of the top stocks over the last five years (mega-, large- and mid-cap only):
Best Performing Stocks: Last Five Years
|Company||Exchange||Ticker||5-Year Performance||Price as of September 11, 2020|
|Grayscale Bitcoin Trust (Btc)||OTC||GBTC||11,120%||$11.22|
|eXp World Holdings||Nasdaq||EXPI||5,528%||$42.21|
|Advanced Micro Devices||Nasdaq||AMD||3,981%||$76.34|
|Enphase Energy Inc||Nasdaq||ENPH||1,296%||$65.1|
|Digital Turbine Inc.||Nasdaq||APPS||1,047%||$24.73|
Some of the names on this list, like Advanced Micro Devices (Nasdaq: AMD) and NVIDIA Inc (Nasdaq: NVDA), may be familiar to you. Others you may not have heard of before now. But what they all have in common is how well they have performed over the past five years.
If you had invested all your money in any one of these best performing stocks five years ago, you would be rich beyond your wildest dreams. (If you want to see how much you could have made on any of these positions, you can use our Investment Calculator.) Of course, putting all of your money in one stock is generally a terrible investment strategy, since if you pick the wrong stock, you could lose most or all of your investment. But for our purposes here, it’s a good way to see just how well these best performing stocks have done.
And if you had held more than one of these positions in your portfolio over the past five years, they would have done very well for you indeed.
Index Funds vs. Picking Individual Stocks
Here’s the hard truth: most investors who try picking individual stocks on their own fail. And by fail, I mean specifically that they fail to beat the market. This is true even of Wall Street fat cats like mutual fund managers – the same mutual fund managers that are likely managing your 401(k) investments – because they’re generally not picking the best performing stocks.
For this reason, many investors prefer to put all of their funds in index funds, where you can basically expect your investments to match market returns minus any fees associated with the fund or ETF. It can be comforting to know that in the long run, the stock market has returned 8% to 10% annually and you can do the same. This can be a great tool for building wealth and can help you sleep very well at night.
But, look again at the returns above. This is powerful evidence that if you pick the right stocks, you could very well beat the market by an enormous amount and could change your life in a very short amount of time. Nevertheless, if you do pick individual stocks, diversifying your portfolio beyond just five or 10 stocks is the key to doing well in the market.
Could You Pick the Best Performing Stocks?
On the one hand, you are unlikely to pick the best performing stocks on your own. On the other hand, neither is your mutual fund manager. So what is the best way to go about investing?
At Investment U, we recommend staying away from the Fat Cats of Wall Street. You don’t need some broker or financial advisor who is going to charge you exorbitant fees to underperform the market. In fact, such an approach is a ridiculous thing to do.
On the other hand, investing completely on your own is hard. If you want to try and beat the market, you really have to dedicate an enormous amount of time to research and understanding which companies are likely to do well. Not over the past five or ten years, but in the future.
Is there a compromise? At Investment U, we believe there is. That’s why we’ve recruited some of the best stock market experts in the world to help thousands of people just like you pick the best performing stocks. And our experts include Chief Investment Expert Alexander Green.
You can subscribe to Alex’s free eletter, Liberty Through Wealth in the subscription box below, and you’ll get his best stock market advice delivered right to your inbox completely free. Meanwhile, keep doing your research to try to identify what will be the best performing stocks of the next five years.
About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.