Thomas Phelps: 100 to 1 in the Stock Market

Thomas Phelps wrote 100 to 1 in the Stock Market, which argues that the surest path to extraordinary returns is to buy a few outstanding growing businesses and hold them for decades, rather than trading. He summed it up as “buy right and hold on”, with patience as the decisive edge most investors lack.

Where this fits: Phelps is a study in Criterion 1 (a great business) applied over a very long time horizon, within the Five Criteria. This article is part of our Learning from the Masters series.

Who Was Thomas Phelps?

Thomas William Phelps was an American investor, securities analyst and writer. He spent much of the twentieth century in investment research and money management, acquiring a long first-hand view of how markets rewarded patience and punished restlessness.

In 1972 he published 100 to 1 in the Stock Market, a book that has since become a quiet classic among long-term investors. Rather than offering a trading system, it is a study of history: Phelps gathered many examples of shares that had risen a hundredfold and asked what lessons they held.

The book’s enduring appeal is its focus on a single, powerful idea executed with discipline. It is less about clever analysis than about the temperament required to let great businesses work over time.

What “100 to 1” Really Means

A “100 to 1” investment is one that turns a single unit of money into a hundred — a hundredfold gain. Phelps collected and examined a large number of such cases from market history.

Two features stand out from his study.

• These returns were real and repeated. Across decades, a surprising number of companies produced hundredfold gains for patient owners. They were not freak accidents.
• They took a long time. A hundredfold gain cannot happen quickly. It requires sustained growth compounded over many years, often decades.

That second point is the hinge of the whole book. If extraordinary returns require time, then the investor’s willingness to wait becomes as important as the original selection.

The Core Advice: Buy Right and Hold On

Phelps distilled his findings into a phrase: buy right, and hold on. The two halves are equally important, and most investors fail at the second.

Buy right

Buying right means selecting genuinely outstanding businesses — companies with the capacity to grow their earnings many times over, driven by real products, expanding markets and sound economics. This is demanding work and cannot be skipped. A hundredfold gain is only possible if the underlying business grows enormously.

The qualities Phelps admired overlap heavily with the first of the Five Criteria: a great business with room to grow and the ability to earn high returns as it does so. Getting this part wrong means there is nothing worth holding.

Hold on

Holding on is where the real difficulty lies. Having bought a great business, Phelps urged investors to resist the constant temptation to sell — to take a quick profit, to react to bad news, to switch to something that looks more exciting.

His view was blunt: you cannot capture a hundredfold gain if you sell after doubling your money. The large winners in his study rewarded only those who stayed the course through years of ups and downs, much as we argue in how to use short-term price movements to your advantage.

Why Trading Is the Enemy

Phelps was unusually hostile to active trading, and his reasoning is worth understanding.

• Selling interrupts compounding. Every sale ends the compounding on that holding and starts a new, uncertain bet. The hundredfold winners needed uninterrupted decades.
• Trading multiplies decisions. Each trade is a chance to be wrong, and more decisions mean more mistakes.
• It incurs friction. Costs and taxes quietly erode returns every time you deal.
• It is driven by emotion. Much trading is a response to fear or excitement rather than to any change in the business.

He contrasted the investor who buys a great business and forgets about it with the one who watches the price daily and trades on every wobble. Over decades, he argued, the first grows wealthy and the second grows tired. This is the same lesson behind our caution against information overload.

The Arithmetic of Patience

To see why patience matters so much, consider what a hundredfold gain actually requires. The table below shows, for round illustrative numbers, roughly how long it takes to turn 1 into 100 at different steady growth rates.

Annual growth rate	Approximate years to reach 100-fold
15% a year	about 33 years
20% a year	about 25 years
26% a year	about 20 years

These figures are illustrative and assume smooth, uninterrupted compounding, which real businesses never deliver. The point is not the exact numbers but the scale of the commitment: even a business growing at a rapid 20% a year needs roughly a quarter of a century to multiply a hundredfold.

That is why Phelps treated patience not as a virtue but as a requirement. Without decades of holding, the mathematics simply does not reach 100. You can explore this compounding yourself with our compound interest calculator.

A Hypothetical: The Cost of Selling Early

Imagine a company, Company A, an outstanding business you buy and that goes on to compound for thirty years into a hundredfold gain for those who hold throughout.

Now imagine you sold after it doubled, pleased with a 100% profit. You captured one part of the journey and missed almost all of it. The gain that made the difference came in the later years, as compounding built on an ever-larger base.

This example is hypothetical and simplified, and hindsight makes the holding look easy when it never is. But it illustrates Phelps’s central warning: the temptation to sell a winner early is precisely what separates ordinary results from extraordinary ones. For when selling is genuinely justified, see when to sell a stock.

Where the Approach Needs Care

Phelps’s philosophy is inspiring, but it must be applied with honesty about its risks.

• Survivorship bias. A study of hundredfold winners looks only at the successes. For every one, many promising companies stalled or failed. You cannot know in advance which is which.
• “Hold on” is not “never sell”. Phelps meant holding great businesses through temporary setbacks, not clinging to a company whose fundamentals have genuinely broken.
• Selection is hard and uncertain. Identifying a future hundredfold business is far easier in hindsight than in real time.
• Concentration and patience are demanding. Holding a volatile winner for decades tests nerves that most investors do not have, and requires sensible position sizing and a strong stomach.

Because of survivorship bias in particular, we treat 100-to-1 as an inspiring illustration of compounding, not a promise. The discipline on quality, balance sheet and price still applies.

How Phelps Fits the Five Criteria

Phelps is, above all, a champion of the first Criterion stretched over a lifetime, reinforced by the temperament to hold. The Five Criteria supply the discipline he assumed rather than spelled out.

Phelps idea	Five Criteria link	How we use it
Buy outstanding growing businesses	1. Great business	ROIC of 15% or more for 5+ years; a long growth runway
Growth that lasts	2. Durable moat	Returns protected by a genuine moat
(assumed, not stressed)	4. Sound balance sheet	Survives downturns without forced selling
Buy right on price	5. Reasonable price	Still refuse to overpay, even for a great compounder
Hold on for decades	Temperament	Let winners run; sell only on broken fundamentals

Phelps supplies the inspiration and the patience; the Five Criteria supply the guardrails that keep patience from curdling into stubbornness.

Frequently Asked Questions

Is a 100-to-1 return realistic for an ordinary investor?

It is rare and never guaranteed, but Phelps showed such returns have happened many times across market history. The realistic takeaway is not to chase a hundredfold winner, but to adopt the behaviour — buying quality and holding patiently — that makes large long-term gains possible at all.

What did Phelps think was the biggest mistake investors make?

Selling too soon. He believed the restless urge to trade, to take quick profits and to react to every piece of news was the main reason investors failed to capture the large gains available to patient owners.

Does “buy right and hold on” mean never selling?

No. It means holding great businesses through temporary setbacks and resisting the urge to trade. If a company’s fundamentals genuinely deteriorate, selling is appropriate. The rule targets needless activity, not all selling.

How is Phelps different from a day trader’s mindset?

They are opposites. A day trader seeks many small gains from short-term price moves; Phelps sought a few enormous gains from long-term business growth. He regarded the trader’s constant activity as self-defeating over long periods.

Your Next Step

Phelps makes the case for patience more vividly than almost anyone. Anchor it in a disciplined process with the Five Criteria framework, feel the power of compounding with the compound interest calculator, and understand why time is your edge in why a long time horizon is your biggest advantage. To see patience in a kindred investor, read Nick Sleep and scale economies shared.

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About the author: Cameron Hayes is a senior investor relations and finance professional who has worked in IR at Nasdaq Copenhagen-listed companies including Nilfisk and Maersk Drilling. He holds an MSc from Copenhagen Business School and a BCom from the University of Ottawa, and founded Gingernomics to teach individual investors the Five Criteria framework. More about Gingernomics.

The content on Gingernomics is for educational and informational purposes only and does not constitute financial advice. Always do your own research and consult a licensed financial advisor before making any investment decisions. Past performance is not indicative of future results.