The Top 20 Global Firms by R&D Expenditures 2018

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Innovation is one of the important attribute’s of the world’s leading companies. High investment in research and development (R&D) leads to great innovation. Hence one way to evaluate top quality firms is to focus on their R&D budgets. Firms that lag in innovation are easily left behind in today’s hyper competitive market. Highly successful firms are generally leaders in innovation. For example, a drug firm cannot a global leader without innovation.

With that said, the top 20 firms in R&D are shown in the table below. These firms are from the top 100 MNEs list published in the World Investment Report by UNCTAD.

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Source: The World Investment Report 2019 , UNCTAD

A few observations:

  • The top five global R&D leaders Amazon(AMZN), Alphabet(GOOG), Samsung, Huawei and Microsoft(MSFT).
  • As usual, US firms dominate the list accounting for nearly half of them.
  • All the Top 7 companies are in the tech sector, This shows the importance of R&D in this sector.
  • The pharma sector has five firms in this list with all of them from the US and Europe.
  • Except Huawei all the other companies from the developed world.
  • Firms from developing countries have a long way to go before they can be world leaders in R&D.

Disclosure: No Positions

The Callan Periodic Table of U.S. Equity Investment Returns 1999-2018

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The following is the Periodic Table of U.S. Equity Investment Returns from 1999 thru 2018. It shows the annual returns of various US equity indices such as the S&P 500, Russell 1000, Russell  3000, etc. in the order of performance:

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Source: The Periodic Table Collection –  20th  Anniversary Edition,  Callan Institute

In the past five years, the S&P 500 has been the best performing index in 4 years. So far this year, the index is up by double digit percentage points. It remains to be seen if the solid gains will hold thru the end of the year.

Download:

Related ETFs:

  • SPDR S&P 500 ETF (SPY)
  • S&P MidCap 400 SPDR ETF (MDY)

Disclosure: No Positions

Ways to Invest in Chinese Stocks: Chart

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Investors looking to invest in the equity market of China have a multitude of options. The simplest way is go with the ADRs of Chinese firms trading on the US markets. However one can also invest via the H-Shares which are Chinese firms listed on the Hong Kong Stocks exchange. There are also other types of stocks such as Red Chips, A-Shares, B-Shares, etc.

The following chart shows the various options available to invest in Chinese equities:

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Source: Eight charts that explain the growing importance of China A-shares, Schroders

Gold vs. S&P 500 Long-Term Returns: Chart

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Gold is a safe heaven asset class. During adverse market conditions for stocks gold tend to perform better and vice versa. To put it another way, bear market in stocks can be bull market for gold and vice versa.

The following chart shows the  long-term return of Gold vs.  S&P 500:

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Source: Is Gold a Good Long-term Investment?, Young Research

From the above article:

Since President Nixon closed the gold window in August of 1971, the price of gold has increased more than 37-fold. From a price of $40.65 at month-end August 1971, gold has risen to $1,528 today. A $1,000 investment in gold at the end of August 1971 would be worth over $37,000 today—a compounded annual return of 7.8%.

How Does Gold’s Return Compare to Stocks and Bonds?

Gold’s 7.8% return since August of 1971 compares favorably to the 7.4% return that intermediate-term U.S. Treasury securities delivered over the same time. More surprising to some is that gold has even appreciated more than stocks over this period. From August of 1971 through today, the S&P 500 index has increased at a 7.3% average annual rate. These numbers for the S&P exclude dividends and the reinvestment of dividends, but gold’s returns relative to stocks remain impressive for an asset that many consider to be the ultimate safe-haven.  (emphasis mine)

Gold’s performance is comparable to stocks as shown in the above because it does not include dividend reinvestments. The chart shows only the price return of S&P 500. If total return, which includes dividends was used the chart would have looked different.

Going back to the main theme of this post, during the 1980s and 1990s owning gold was a bad idea as stocks soared in a long and strong bull run. However during the 2000s stocks return was modest while gold performed very well.

Updated (Sept 22, 2024):

1.Gold outperforms stocks in the 21st century:

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Source: Gold has outperformed the S&P 500 in the 21st century, FX Street

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a. SP 500 vs. Dow Jones vs Gold vs. Silver – 10 Years Return Chart (From Feb 2014 thru Feb 2024):

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Source: LongTermTrends

1.SP 500 vs Dow Jones vs Gold – 50 Years Return  Chart:

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2.SP 500 vs Dow Jones vs Gold – 100 Years Return Chart:

3.SP 500 vs Dow Jones vs Gold 50 Years Total Return Chart (i.e. including Dividends Reinvested)

Color Legend:

  •  S&P 500 Price Index
  • Dow Jones
  • Wilshire Large-Cap
  • Gold
  • Silver

Source: Long Term Trends

3.Gold vs. S&P 500 Total Returns Chart From 1990 to 2017:

Source: Topdown charts

4.Gold vs. S&P 500 Return Chart From 2000 to 2010:

Source: Stockcharts

Related ETFs:

  • SPDR Gold Trust ETF (GLD)
  • SPDR S&P 500 ETF (SPY)

Disclosure: No Positions