The Drawdowns Behind the Giants: Lessons from the Best Performing Stocks (1985–2024)

When investors think of the "best-performing stocks," they often envision a smooth upward journey of compounding wealth. But the truth is more nuanced—and far more valuable to understand. The Visual Capitalist chart, powered by data from Counterpoint Global and Morgan Stanley Investment Management, offers a revealing look at the drawdowns experienced by the best-performing stocks between 1985 and 2024.

Yes, these companies delivered incredible annualised returns—from Amgen’s 22.7% to Lilly’s 17.2%. But nearly every one of them also endured devastating drops, some losing over 80–90% of their value before recovering. This paradox—high return, high volatility—is a vital lesson for long-term investors.

Understanding Drawdowns: Not Just Numbers, But Emotional Tests

A drawdown is the peak-to-trough decline during a specific record period. It's easy to admire Amgen or Apple in hindsight, but holding on during an 83% or 90% decline is a test few investors pass.

Here’s what the data reveals:

Company	Max Drawdown	Recovery Time (Years)	Annualised Return
Amgen	-64%	1.6	22.7%
Apple	-83%	1.8	21.6%
Paychex	-67%	7.4	20.8%
The Home Depot	-76%	4.4	20.5%
Progressive	-74%	2.1	20.4%
Williams Sonoma	-90%	2.5	20.4%
Stryker	-60%	4.8	19.7%
Brown & Brown Insurance	-58%	7.1	19.7%
Raymond James	-72%	2.0	19.6%
HF Sinclair	-87%	3.7	19.4%

The list continues with Nike, Applied Materials, Graco, Badger Meter, and even Eli Lilly and Sherwin-Williams—all of which faced setbacks of 50–85%, and yet rewarded patient investors handsomely.

Key Lessons for Investors

1. Great Returns Require Great Patience

Every top-performing stock on this list had to survive significant turbulence. For instance, Williams Sonoma dropped 90%, yet grew at 20.4% annually. It's not about avoiding declines; it's about surviving them with conviction.

2. Recovery Takes Time

The recovery period ranged from 1.6 years (Amgen) to 9.6 years (Lilly and Badger Meter). Investors who panic and sell during downturns often miss the eventual rally. Long-term thinking is non-negotiable.

3. Volatility is Not the Enemy

High volatility doesn’t mean bad investments. In fact, volatility often accompanies innovation and growth. Companies that are disrupting industries—like Apple or Amgen—will naturally see bigger market swings.

4. Diversification Is Key

Not every investor can stomach an 80% decline, even if the outcome is a 20% CAGR. The lesson here is not to put all your eggs in one stock, but to spread risk across companies and sectors.

5. Stay Invested, Even When It Hurts

One of the clearest takeaways is that the best gains often follow the worst periods. Imagine selling Apple after it fell 80%—you’d have missed the recovery that turned it into a $3 trillion company.

Comparing with the S&P 500

Interestingly, the S&P 500 had a far milder drawdown of 58% and recovered in about 4.2 years. But its annualised return over the same period was only 11.8%—respectable, but far less than the top-performing individual stocks.

This illustrates the risk-reward tradeoff clearly: while the index offers smoother returns, individual stock pickers willing to endure more risk have historically been rewarded more generously.

What Types of Companies Made This List?

A closer look at the sectors represented:

• Healthcare: Amgen, Lilly, Stryker

• Consumer Discretionary: Williams Sonoma, Home Depot, Nike

• Financial Services: Paychex, Raymond James, Progressive

• Industrial and Materials: Applied Materials, Graco, Sherwin-Williams

These companies share one trait: secular growth drivers. Whether it was biotech innovation, retail expansion, or insurance and asset management, these firms were riding megatrends—and their volatility was part of the journey, not a bug.

Long-Term Value of Staying Invested

$10,000 Invested in 1985	Value in 2024 (Est.)
Amgen (22.7%)	~$28 million
Apple (21.6%)	~$19 million
Paychex (20.8%)	~$13 million
S&P 500 (11.8%)	~$1.1 million

The difference between 11% and 20% annualized return over 40 years is the difference between being comfortably retired—and being outrageously wealthy.

The Price of Greatness

The best-performing stocks didn’t glide smoothly to the top—they plummeted, recovered, and soared. Their paths were anything but easy. For investors looking to replicate this kind of success, the message is clear:

“The market is a device for transferring money from the impatient to the patient.” – Warren Buffett

The real alpha lies in holding on through pain, buying when it feels worst, and believing in long-term potential.

Sources:

• Visual Capitalist: The Drawdowns of the Best Performing Stocks (1985–2024)

• Counterpoint Global / Morgan Stanley Investment Management

• Historical stock data: Yahoo Finance, Macrotrends

• S&P 500 annualised returns: DQYDJ

RISK WARNING: All investing is risky. Returns at not guaranteed. Past performance and case studies are no guarantee of future results.

Disclaimer: The content provided on this blog is for informational purposes only and does not constitute financial advice. The opinions expressed here are the author's own and do not reflect the views of any associated companies. Investing in financial markets involves risk, including the potential loss of your invested capital. Past performance is not indicative of future results. 

You should not invest money that you cannot afford to lose. Mentions of specific securities, investment strategies, or financial products do not constitute an endorsement or recommendation. The author may hold positions in the securities discussed, but these should not be viewed as personalised investment advice. 

Readers are encouraged to conduct their own research and seek professional advice before acting on any information provided in this blog. The author is not responsible for any investment decisions made based on the content of this blog.

Alpesh Patel OBE

www.campaignforamillion.com 

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