I’m old enough to remember when big pharmaceutical companies were seen as heroes, and even liberals in the media wanted to hug them on national TV. But that was a long, long time ago. Way back in … oh … 2021.
Not anymore. Vermont’s self-described democratic socialist senator, Bernie Sanders, is dragging the CEOs of several of these companies before the cameras on Capitol Hill to name them and shame them for making too much money. The companies in question are Johnson & Johnson
JNJ,
-1.60%,
Bristol-Myers Squibb
BMY,
-0.90%
and Merck
MRK,
-0.93%.
They are running a “rigged system … based on ripping off the American people,” Sanders said this week in a report from the Senate Committee on Health, Education, Labor and Pensions, which Sanders chairs. They are “enormously profitable,” the report said, and spend “billions of dollars on stock buybacks and dividends to make their wealthy stockholders even richer.” Really? If Bernie Sanders thinks making money as a stockholder in these companies is so easy, he should try it. As MarketWatch’s Eleanor Laise writes, Sanders’s committee may not be focusing on the most important areas. Anyone who has tried to take advantage of this apparent “rigged system” through their 401(k) or IRA is counting the cost. Stock-market data show that over the past one, three, five or 10 years, you were much, much better off in a simple S&P 500 index fund
SPY
than you were in these stocks. Over the past decade, these three “Big Pharma” stocks have, on average, produced just three-fifths of the total returns of the S&P 500
SPX.
The results are similar when you compare them with, say, an equal-weighted version of the S&P 500. These three pharmaceutical stocks, taken together, actually lost investors money in 2023, while stocks more broadly rose. In other words, if you bought these stocks figuring they were the route to easy riches on account of the companies’ “greed,” a “rigged system” and a business model based on “ripping off the American people,” and you figured that all that money they spent on stock buybacks and dividends would make you “even richer” — well, hard luck. Of the three, Merck has performed the best, but even this stock has done worse than an S&P 500 index fund over 10 years. Johnson & Johnson and Bristol-Myers Squibb have done worse than the index over almost any recent time frame you care to mention. Sanders complained that the CEOs are nonetheless paid large sums of money, despite this underperformance. He’s right about that. A look through the compani …
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Not anymore. Vermont’s self-described democratic socialist senator, Bernie Sanders, is dragging the CEOs of several of these companies before the cameras on Capitol Hill to name them and shame them for making too much money. The companies in question are Johnson & Johnson
JNJ,
-1.60%,
Bristol-Myers Squibb
BMY,
-0.90%
and Merck
MRK,
-0.93%.
They are running a “rigged system … based on ripping off the American people,” Sanders said this week in a report from the Senate Committee on Health, Education, Labor and Pensions, which Sanders chairs. They are “enormously profitable,” the report said, and spend “billions of dollars on stock buybacks and dividends to make their wealthy stockholders even richer.” Really? If Bernie Sanders thinks making money as a stockholder in these companies is so easy, he should try it. As MarketWatch’s Eleanor Laise writes, Sanders’s committee may not be focusing on the most important areas. Anyone who has tried to take advantage of this apparent “rigged system” through their 401(k) or IRA is counting the cost. Stock-market data show that over the past one, three, five or 10 years, you were much, much better off in a simple S&P 500 index fund
SPY
than you were in these stocks. Over the past decade, these three “Big Pharma” stocks have, on average, produced just three-fifths of the total returns of the S&P 500
SPX.
The results are similar when you compare them with, say, an equal-weighted version of the S&P 500. These three pharmaceutical stocks, taken together, actually lost investors money in 2023, while stocks more broadly rose. In other words, if you bought these stocks figuring they were the route to easy riches on account of the companies’ “greed,” a “rigged system” and a business model based on “ripping off the American people,” and you figured that all that money they spent on stock buybacks and dividends would make you “even richer” — well, hard luck. Of the three, Merck has performed the best, but even this stock has done worse than an S&P 500 index fund over 10 years. Johnson & Johnson and Bristol-Myers Squibb have done worse than the index over almost any recent time frame you care to mention. Sanders complained that the CEOs are nonetheless paid large sums of money, despite this underperformance. He’s right about that. A look through the compani …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]