Need Stock that Did Extremely Well between 1979 and 2001

[ERD50]

...

From a "realistic" perspective, 1979 is just a few years after the oil embargo/oil price spikes. Back then, oil might seem like a more natural choice to pick for holding for 30 years, rather than some random IPO that no one heard of and would have almost no reason to buy.

Agreed. Picking AAPL, MSFT, or WMT seems too 'set up' and phony to me. Any of those could have been very likely to become 'wallpaper stocks' as well.

Hasn't our character heard of diversification? All their eggs in one basket? They are depending on this stash, and they put it all in a single stock? That's crazy. How about buy all the stocks in the 1979 DOW 30? That seems like a far more realistic plan to me. Easy to back-test that I would think.

Now, if you want to throw something more interesting in there, maybe he picks one stock at random to add to the DOW 30? Throws a dart and hits one of those winners mentioned? Or picks one because of the name, or some other trivial lucky guess?

...

He'll be out of luck regarding splits also, so BRKA is looking good (never split).

Why? The certificate has the issue date on it, I'm very certain that the agent will adjust for any splits.

But what about the lack of ID. Those certificates have names on them. So if this person is considered dead, they would go to the estate, right? Do they issue stock certificates to be paid to "the bearer"?

-ERD50

 

[TromboneAl]

Hasn't our character heard of diversification? All their eggs in one basket? They are depending on this stash, and they put it all in a single stock? That's crazy. How about buy all the stocks in the 1979 DOW 30? That seems like a far more realistic plan to me.

Yes, he will do something like that. I just want there to be one stock that he hits the jackpot on.

[Regarding splits] Why? The certificate has the issue date on it, I'm very certain that the agent will adjust for any splits.

-ERD50

My research on splits suggests it's very much like dividends. That is, info goes into your "account," but in this case there is no account and no way to prove identity.

But what about the lack of ID. Those certificates have names on them. So if this person is considered dead, they would go to the estate, right? Do they issue stock certificates to be paid to "the bearer"?

I'm treating this like the situation in which one finds stock certificates in the attic of a house. Yes, it will be a bearer certificate:

Wikipedia:

A bearer stock certificate, as its name implies is a bearer instrument, and physical possession of the certificate entitles the holder to exercise all legal rights associated with the stock.

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I've got two travelers.

One is a jewel thief, and she puts her ill-gotten diamonds, etc. in her cache. There need be no impressive ROI.

I want the other to have about 11 million dollars at the time of the story. My current thinking is that he's well off in 79, but the certificate makes him very wealthy.

 

[cathy63]

Bearer shares are illegal in most states. A quick google shows they're legal in Nevada and Delaware, but I don't know if you'll find a well known U.S. corporation that would issue them and would have survived for 30 years.

 

[MichaelB]

My research on splits suggests it's very much like dividends. That is, info goes into your "account," but in this case there is no account and no way to prove identity.

I see an important difference between splits and dividends. The dividend does need an account to be credited, but the stock doesn't . Just holding the original share entitles one to all the splits since it was emitted.

 

[clifp]

I think Berkshire A fits your needs a pretty well. A 100 share could have been bought for for under $30,000 in 1979 and is now with 21.5 million. No dividends, no splits, and Warren had made a TV appearance and business magazine appearance or two by then.

 

[TromboneAl]

Bearer shares are illegal in most states. A quick google shows they're legal in Nevada and Delaware, but I don't know if you'll find a well known U.S. corporation that would issue them and would have survived for 30 years.

Do you think someone could have gotten bearer shares of BRKA in 1979?

And they'd still be honored in 2012, yes?

Only a few decades ago, bearer shares were the normal way to establish ownership rights in a company. When you incorporated a company, you received share certificates with no one's name recorded on it. Whoever possessed the certificate controlled ownership.



A company that issues bearer shares has no shareholder list or register for those shares. The identity of the shareholders is impossible to determine. You can change ownership simply by handing the certificate over to someone else.

Today, only a very few offshore jurisdictions (e.g., Panama) still offer bearer shares, and all have placed severe restrictions on them. The reason is that the opportunity for anonymous ownership via a bearer share company is too much for tax authorities and other busybodies to (pardon the pun) "bear." As a result, an alphabet soup of international agencies, starting with the Financial Action Task Force, have demanded an end to all bearer share companies. And they've largely succeeded in eliminating them.

 

[ERD50]

Do you think someone could have gotten bearer shares of BRKA in 1979?

And they'd still be honored in 2012, yes? ...

Sounds pretty risky for the time traveler.

Though rather boring, if you are going for security, why not 30 year treasury bonds? They would be past maturity by a few years, but what could be more assured of having value than a US treasury bond? And you'd gain some interest. Not sure about proving identity though.... hmm, I think you give your SS as ID?

If the US has defaulted, you are down to rations, guns, and ammo. Stocks will be pretty near worthless, I'd think.

-ERD50

 

[cathy63]

Do you think someone could have gotten bearer shares of BRKA in 1979?

And they'd still be honored in 2012, yes?

Well, maybe. I only know about this from a friend who had to deal with inherited bearer shares in a European company. In her case, the date to convert from bearer shares to registered shares had passed before the original owner died, and the executor of the estate had to hire someone to deal with it.

As I understand it, the original shares had to be submitted to the foreign government, and all they could do was trade them for cash. There was some sort of escrow account from which the government paid the estate and the share value was taken at the date of conversion, not at the current market value, and there were also legal fees. In the end, the heirs ended up getting less than they thought they would.

This is second-hand info from my friend, so it might not be 100% accurate and it might not be applicable to a U.S. company. I just found it interesting and it stuck in my mind because it was the first time I'd ever heard of bearer shares.

 

[TromboneAl]

Another option is that he goes to a prestigious law firm, and sets up a trust fund type thing for an aggressive mutual fund.

The agreement states that the firm should pay the balance of the trust fund to anyone who provides a matching half-sheet of ripped up paper, no questions asked.

This could also be accomplished with a password, but that has some other risks.

 

[nuisance]

Proving ownership aside, having a certificate must take splits into account. What would happen if there was a reverse split?

Here are the stocks that went up in stock price the most:

NYSE:APA       2.85  85.45  2898%  23.00  87.29   280%
NYSE:DTE       1.14  54.93  4718%  14.88  59.38   299%
NYSE:LMT       0.97  79.65  8111%  21.50  87.16   305%
NYSE:BRT       1.27   6.37   402%   1.50   6.37   325%
NYSE:FDX       1.24  90.53  7201%  21.00  91.54   336%
NYSE:ETR       2.16  61.44  2744%  14.75  68.58   365%
NYSE:FRT       1.21  99.39  8114%  16.25 105.15   547%
NYSE:CL        0.35  49.33 13994%  16.00 103.72   548%
NYSE:GFF       9.95   8.40   -16%   1.12   8.58   666%
NYSE:PHI       0.46  55.61 11989%   5.62  64.46  1047%

Last column is increase in stock price. The 4th column is increase adjusted for splits etc.

So on pure value none of these look amazing, given that inflation was 316% over this timeframe.

 

[MRG]

Proving ownership aside, having a certificate must take splits into account. What would happen if there was a reverse split?

In the distant past I wrote code for a stock transfer system, used by the transfer agents. That system was aware of corporate actions, spilts being one of many.

 

[Totoro]

Nuisance: I would assume your database excludes dead and taken over companies.

Anonymous ownership is the key issue here.

Besides commodities (like diamonds, drugs or gold, cf. your other character) it's nigh impossible to claim assets without identity these days.

So best I can come up with is to own some kind of legal entity, run it on auto-pilot (through a law firm) and make sure you don't get declared legally dead during absence (shouldn't be too hard if you keep paying taxes). The entity can easily own stocks with runaway returns and deal with conversion to digital stock.

Then once back in society, pick up identity papers and resume control.

 

[TromboneAl]

I'm basing the split info on this article:

The only thing that happens to your stock certificates in the event of a stock split is that each individual certificate becomes worth less than before, but you gain additional shares that are given to you in electronic form.

Read more: I hold stock certificates in a company that just had a stock split. What happens now?
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[MRG]

I'm basing the split info on this article:

The only thing that happens to your stock certificates in the event of a stock split is that each individual certificate becomes worth less than before, but you gain additional shares that are given to you in electronic form.

Read more: I hold stock certificates in a company that just had a stock split. What happens now?
Follow us: @Investopedia on Twitter
​

Al,

From memory, that's how I remember it working. One implementation I worked on the master account record had positions for both certificate backed shares and electronic shares. So you lost nothing, ownership of the certs gave you access to both. Course I'm old and that memory was from last century.

 

[ESRwannabe]

I haven't read the other comments yet, but I can tell you that Phillip Morris (before all the spin offs) would look fantastic as a case study. I'm pretty certain it blew away the S&P.

 

[nuisance]

Nuisance: I would assume your database excludes dead and taken over companies.

That's right. Companies that changed ticker symbol for any reason would not be represented even though maybe they should be. Dead ones probably wouldn't make the best-performing list anyway, but others might.

 

[Sycamore]

+1 on Berkshire Hathaway

What about GE (maybe you have to exclude 2001)