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The Most Valuable Companies of All-Time

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Dutch East India Company compared

Chart: The Most Valuable Companies of All-Time

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Before speculative bubbles could form around Dotcom companies (late-1990s) or housing prices (mid-2000s), some of the first financial bubbles formed from the prospect of trading with faraway lands.

Looking back, it’s pretty easy to see why.

Companies like the Dutch East India Company (known in Dutch as the VOC, or Verenigde Oost-Indische Compagnie) were granted monopolies on trade, and they engaged in daring voyages to mysterious and foreign places. They could acquire exotic goods, establish colonies, create military forces, and even initiate wars or conflicts around the world.

Of course, the very nature of these risky ventures made getting any accurate indication of intrinsic value nearly impossible, which meant there were no real benchmarks for what companies like this should be worth.

Speculative Peak

The Dutch East India Company was established as a charter company in 1602, when it was granted a 21-year monopoly by the Dutch government for the spice trade in Asia. The company would eventually send over one million voyagers to Asia, which is more than the rest of Europe combined.

However, despite its 200-year run as Europe’s foremost trading juggernaut – the speculative peak of the company’s prospects coincided with Tulip Mania in Holland in 1637.

Widely considered the world’s first financial bubble, the history of Tulip Mania is a fantastic story in itself. During this frothy time, the Dutch East India Company was worth 78 million Dutch guilders, which translates to a whopping $7.9 trillion in modern dollars.

This is according to sources such as Alex Planes from The Motley Fool, who has conducted extensive research on the history of very large companies in history.

Modern Comparisons

The peak value of the Dutch East India Company was so high, that it puts modern economies to shame.

In fact, at its height, the Dutch East India Company was worth roughly the same amount as the GDPs of modern-day Japan ($4.8T) and Germany ($3.4T) added together.

Even further, in today’s chart, we added the market caps of 20 of the world’s largest companies, such as Apple, Microsoft, Amazon, ExxonMobil, Berkshire Hathaway, Tencent, and Wells Fargo. All of them combined gets us to $7.9 trillion.

At the same time, the world’s most valuable company (Apple) only makes it to 11% of the peak value of the Dutch East India Company by itself.

Historic Heavyweights

Despite the speculation that fueled the run-up of Dutch East India Company shares, the company was still successful in real terms. At one point, it even had 70,000 employees – a massive accomplishment for a company born over 400 years ago.

The same thing can’t be said for the other two most valuable companies in history – both of which were the subject of simultaneous bubbles occurring in France and Britain that popped in 1720.

In France, the wealth of Louisiana was exaggerated in a marketing scheme for the newly formed Mississippi Company, and its value temporarily soared to the equivalent of $6.5 trillion today. Meanwhile, a joint-stock company in Britain, known as the South Sea Company, was granted a monopoly to trade with South America. It was eventually worth $4.3 trillion in modern currency.

Interestingly, both would barely engage in any actual trade with the Americas.

The other historic heavyweights included in our chart?

  • Saudi Aramco, at $4.1 trillion, based on calculations by University of Texas finance professor Sheridan Titman in 2010, and adjusted for inflation.
  • PetroChina surpassed $1 trillion in market cap in 2007. Adjusted for inflation that’s $1.4 trillion today.
  • Standard Oil, before its famous breakup due to monopolistic reasons, was worth at least $1 trillion. Adjusted for inflation it would likely be more, but we kept this conservative.
  • Microsoft reached its peak valuation in 1999, at the top of the Dotcom Bubble. Today, that would be equal to $912 billion.
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Markets

Beyond Big Names: The Case for Small- and Mid-Cap Stocks

Small- and mid-cap stocks have historically outperformed large caps. What are the opportunities and risks to consider?

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A line chart showing the historical return performance of small-, mid-, and large-cap stocks.

 

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The following content is sponsored by New York Life Investments
An infographic comparing low-, mid-, and large-cap stocks, including an area graph showing historical returns, a bubble chart showing how much $100 would be worth over 35 years, a horizontal bar graph showing annualized volatility, and a line graph showing relative forward price-to-earnings ratios, that together show that mid-cap stocks present a compelling investment opportunity.

Beyond Big Names: The Case for Small- and Mid-Cap Stocks

Over the last 35 years, small- and mid-cap stocks have outperformed large caps, making them an attractive choice for investors.

According to data from Yahoo Finance, from February 1989 to February 2024, large-cap stocks returned +1,664% versus +2,062% for small caps and +3,176% for mid caps.  

This graphic, sponsored by New York Life Investments, explores their return potential along with the risks to consider.

Higher Historical Returns

If you made a $100 investment in baskets of small-, mid-, and large-cap stocks in February 1989, what would each grouping be worth today?

Small CapsMid CapsLarge Caps
Starting value (February 1989)$100$100$100
Ending value (February 2024)$2,162$3,276$1,764

Source: Yahoo Finance (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.

Mid caps delivered the strongest performance since 1989, generating 86% more than large caps.

This superior historical track record is likely the result of the unique position mid-cap companies find themselves in. Mid-cap firms have generally successfully navigated early stage growth and are typically well-funded relative to small caps. And yet they are more dynamic and nimble than large-cap companies, allowing them to respond quicker to the market cycle.

Small caps also outperformed over this timeframe. They earned 23% more than large caps. 

Higher Volatility

However, higher historical returns of small- and mid-cap stocks came with increased risk. They both endured greater volatility than large caps. 

Small CapsMid CapsLarge Caps
Total Volatility18.9%17.4%14.8%

Source: Yahoo Finance (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.

Small-cap companies are typically earlier in their life cycle and tend to have thinner financial cushions to withstand periods of loss relative to large caps. As a result, they are usually the most volatile group followed by mid caps. Large-cap companies, as more mature and established players, exhibit the most stability in their stock prices.

Investing in small caps and mid caps requires a higher risk tolerance to withstand their price swings. For investors with longer time horizons who are capable of enduring higher risk, current market pricing strengthens the case for stocks of smaller companies.

Attractive Valuations

Large-cap stocks have historically high valuations, with their forward price-to-earnings ratio (P/E ratio) trading above their 10-year average, according to analysis conducted by FactSet.

Conversely, the forward P/E ratios of small- and mid-cap stocks seem to be presenting a compelling entry point. 

Small Caps/Large CapsMid Caps/Large Caps
Relative Forward P/E Ratios0.710.75
Discount29%25%

Source: Yardeni Research (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.

Looking at both groups’ relative forward P/E ratios (small-cap P/E ratio divided by large-cap P/E ratio, and mid-cap P/E ratio divided by large-cap P/E ratio), small and mid caps are trading at their steepest discounts versus large caps since the early 2000s.

Discovering Small- and Mid-Cap Stocks

Growth-oriented investors looking to add equity exposure could consider incorporating small and mid caps into their portfolios.

With superior historical returns and relatively attractive valuations, small- and mid-cap stocks present a compelling opportunity for investors capable of tolerating greater volatility.

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