Blackstone's Decade-Long Dominance: How the Private Equity Giant Outpaces the S&P 500 and NASDAQ

Over the past decade, Blackstone has delivered a staggering 21.47% compounded annual growth rate (CAGR), significantly outpacing the S&P 500's 12.48% and the NASDAQ Composite's 17.66% according to data. This performance has translated into a total return of over 780% for Blackstone, dwarfing the S&P 500's 300% as reported. The numbers are nothing short of extraordinary, especially when you consider that private equity, as a category, only narrowly edged out the S&P 500 in 2020, with the index posting an average annual return of 13.99% versus private equity's 13.77% according to research.

But here's the twist: while Blackstone's long-term numbers are a masterclass in compounding, its recent performance has been a rollercoaster. Year-to-date, Blackstone shares are down 9.37%, lagging far behind the NASDAQ Composite's 21.16% return as per data. On a 12-month basis, the gap widens further, with Blackstone posting a -7.48% return compared to the NASDAQ's positive figures. What gives?

The answer lies in the nature of Blackstone's business. As a titan of alternative asset management, Blackstone thrives in private equity, real estate, and credit markets-sectors that are inherently cyclical and subject to valuation lags. In contrast, the NASDAQ Composite, driven by tech darlings and high-growth stocks, has benefited from a relentless tailwind of innovation and investor frenzy. This divergence explains why Blackstone's short-term underperformance shouldn't overshadow its long-term prowess.

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Let's break it down. Blackstone's 23.39% annualized return over the past decade according to analysis crushes the NASDAQ's 19.49%. That's a 4-percentage-point edge, which compounds into a massive wealth gap. For example, $100 invested in Blackstone a decade ago would now be worth $880, while the same amount in the NASDAQ would be worth $630. The math is simple: compounding at a higher rate, even with a few stumbles along the way, creates outsized results.

Critics might point to Blackstone's recent struggles-like its 16% YTD decline versus the NASDAQ's 20.2% gain as reported-as a sign of waning momentum. But this misses the forest for the trees. Blackstone's core strength lies in its ability to harness the power of private markets, where it can deploy capital into undervalued assets and hold them through cycles. Public markets, by contrast, are subject to daily volatility and speculative swings. As one analyst put it, "Blackstone's playbook is about patience and conviction, not timing the NASDAQ's next move."

Moreover, Blackstone's financials tell a story of resilience. Its return on equity (ROE) of 19.84% outperforms BlackRock's 15.57%, proving that the firm's management is still generating exceptional returns for shareholders. The challenges it faces-trade policy uncertainties and slower deal activity-are macroeconomic headwinds, not internal failures. These are the same risks that buffet the broader market, yet Blackstone's diversified portfolio of private equity, real estate, and credit funds provides a buffer.

So, what's the takeaway for investors? Blackstone is a prime example of how private equity can outperform public markets over the long haul. Its decade-long run is a testament to the power of compounding in alternative assets, even as it navigates short-term turbulence. For those with a 10-year horizon, the numbers are clear: Blackstone's ability to harness the illiquidity premium and capitalize on market dislocations gives it a unique edge.

Of course, this isn't a call to ignore the risks. Blackstone's recent underperformance highlights the importance of diversification and discipline. But for investors who can stomach the volatility and stay focused on the long game, Blackstone remains a compelling case study in the magic of compounding.

Data from The Blackstone Group Inc. (BX) - Stock Analysis indicates that Blackstone has delivered a 21.47% CAGR and 23.39% annualized return over the past decade.
According to a report by Meet the Monster Stock That Continues to Crush the Market, Blackstone's total return of 780% and ROE of 19.84% outperform both the S&P 500 and its peers.
The NASDAQ Composite Index's 10-year CAGR of 17.66% is detailed in The price cagr for Nasdaq (NDAQ) stock.
A detailed analysis from Comparing Private Equity Returns to Other Investments notes that the S&P 500 slightly outperformed private equity in 2020.
Blackstone (BX) Total Return YTD, TTM, 3Y, 5Y, 10Y, 20Y highlights the firm's 12-month return of -7.48% versus the NASDAQ's positive performance.
Is Blackstone Stock Underperforming the Nasdaq? reports that Blackstone shares are down 16% YTD compared to the NASDAQ's 20.2% gain.