Stocktake: Tech stocks more often losers than winners

New research suggests the tech sector is often a graveyard for investors’ dreams

We focus on the Apples and the Microsofts, but forget about the Amstrads, the Nortels and the Commodores. For every big tech winner there are many more big losers. Photograph: Getty Images

Trying to find the stock market stars of the future is like looking for a needle in a haystack, but they’re probably going to be technology stocks – right?

One might think so given the best performing stocks of all time have been tech stocks. Both Apple and Microsoft have generated annual returns of 27 per cent since debuting on the stock market. Put another way, $100 invested in Apple stock at the time of its December 1980 initial public offering (IPO) would be worth over $1.5 million today. Amazon, Google, Facebook – chances are when you think of lottery-like market winners you probably think of tech stocks.

However, new research from Prof Hendrik Bessembinder suggests the tech sector is more often a graveyard for investors' dreams.

Bessembinder is well known for ground-breaking research showing most stocks turn out to be flops, with a tiny percentage of super-stocks accounting for the bulk of market returns. His latest research examines extreme stock market performers in more detail, examining the best and worst performers in every decade since the 1950s.

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Tech stocks have been “more likely to appear on a list of the worst rather than best performers”, says Bessembinder, accounting for almost a third of the worst performers.

We focus on the Apples and the Microsofts, but forget about the Amstrads, the Nortels and the Commodores. For every big tech winner, there are many more big losers.