Backtest: Buy and Hold PEP (PepsiCo, Inc.)

This analysis evaluates a buy-and-hold strategy over the past 53 years, providing a historical perspective on PEP's performance from 1972-06-01 to 2025-07-03.

Note: This simulation uses adjusted close prices, meaning all historical prices have been retroactively adjusted for splits and dividends. To achieve similar results in practice, you would need to reinvest all dividends automatically as they are paid.

Performance Overview

Starting with an initial capital of $10,000.00, we purchased shares of PEP on 1972-06-01, at a price of $0.39 per share (adjusted for splits and dividends). No trading, no adjustments — just a simple buy-and-hold approach.

We held the position continuously through every market twist and turn, never selling. As of 2025-07-03, the price of PEP had risen to $135.38. While we didn't sell, we can still assess the performance by calculating the current value of the investment: $3,513,168.44 — a total gain of 35,031.68%.

This translates into an annualized return of 11.67% over the entire period. This return is moderately above long-term averages. It reflects solid long-term performance and an effective strategy.

Drawdown and Risk

The maximum drawdown recorded during this period was 66.21%. This drawdown began after a peak price of $0.40 on 1972-12-07, and reached its lowest point on 1974-10-03 when the price fell to $0.14. The drawdown lasted for 665 days.

The drawdown was substantial, though not uncommon for long-term equity strategies that span full market cycles. This level suggests exposure to significant corrections or crashes. The maximum drawdown lasted over a year, indicating an extended period of underperformance. This duration is typical of major corrections or bear markets.

The Calmar Ratio — annualized return divided by maximum drawdown — was 0.18, reflecting the tradeoff between return and volatility.

The Calmar Ratio is on the lower side of what's commonly seen in broad-market strategies over extended periods.