Back to the Future: the shares Marty McFly should have bought

Which shares have seen the biggest growth since 1985?

There has been an awful lot of talk about the Back to the Future franchise lately, mainly because in the second instalment our heroes Marty McFly and Doc Brown travel forward in time by 30 years to October 2015, our present day.

But what if you could go back in time by 30 years thanks to your own time-travelling DeLorean, armed with the stock market knowledge you have today? How would you go about making a fortune from shares? 

The top 10 UK shares from 1985 to 2015

Laith Khalaf, senior analyst at investment advisers Hargreaves Lansdown, has come up with a list of the 10 shares that have produced the highest returns to shareholders in the 30 years to 21st October 2015.

Here they are, based on investing £1,000 on 21st October 1985 for 30 years (with dividends reinvested; shares sorted from highest to lowest return):

Had Marty McFly (or you) invested a grand in the shares of property developer Helical Bar 30 years ago, he would now be sitting on a pot worth nearly three-quarters of a million pounds.

This is by far the stand-out performance over the past three decades of any PLC share that remains London-listed today, returning more than 734 times your money. This works out to an incredible percentage gain of 73,324% in three decades.

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Six winners from the credit and housing booms

In second place is high-interest moneylender S&U, which turned £1,000 into nearly £450,000 over 30 years. Oddly, in third place is S&U's larger rival, Provident Financial, which turned a grand into nearly £227,000 over 30 years.

Looking down this list, two very familiar investment themes emerge: companies whose shares have done extremely well thanks to the UK's twin booms in credit and house prices. Of the 10 shares listed, no fewer than six (Helical Bar, S&U, Provident Financial, Persimmon, Rathbone Brothers and Bellway) fall into the finance or property sectors.

Shares in these six companies have done particularly well largely thanks to the incredible boom in house prices and consumer credit from the early 1980s until today. In late 1985, a typical UK home cost around £35,436, according to Nationwide Building Society. Today's figure is £195,733.

Picking tomorrow's winners

The bad news is that the winners in the above table are certainly not going to be the best performers of the future. The simple reason in that these companies are all sizeable businesses today, making them too big to become the Goliaths of 2045. The winners of 2045 are likely to be tiny or private companies today, if they even exist.

Khalaf at Hargreaves Lansdown says: "Ideally, we’d all like a DeLorean time machine, but in the real world we have to make do with common sense and a bit of elbow grease. If you want to invest in a company, make sure you do your research and hold its shares as part of a diversified portfolio. Investors shouldn’t expect to get rich overnight either – getting rich slowly might not sound so appealing, but it's likely to be the winning strategy in the long run."

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