If you didn't predict Novo Nordisk's hit weight loss drug ahead of time, but just held a big portfolio of large pharmas, the returns seem pretty disappointing to me. Or put differently, if you have a lot of extra money to invest today, would you significantly overweight big pharma based on what we learned from this article?
For an individual investor who wants unopinionated exposure to “Big Pharma” it’s hard to buy more than, say, the ten largest stocks as in your example. They’d probably also focus on American stocks only since European are typically harder to buy. And then they miss out on Novo Nordisk.
But an index fund that buys (for example) the top 100 global companies in this vertical would have benefited from the rise of Novo.
If you had invested one million in a fund that held Novo at only a 2% weighing five years ago, there’s now a 100k gain from that stock alone. That makes up for a lot of middling big caps, and you didn’t have to actively pick Novo or any other stock.
If you had constantly lowered taxes, like we had constantly lowered interest for a couple of years, then that could have been expected to be reflected in the share price.
Or if you could isolate a short time period when they started doing this, then that would have affected earnings and likely the share price. But once that is the way the business operates, why would shares continue to rise? It does not make sense.
High returns comes when stocks do better than expected, these companies are expected to fleece people to hell and make massive profits so when they do that it is just the expected thing happening meaning normal return on investment.