Why the vast majority of stocks fail to beat simple government bonds
Patrick Boyle examines the top-performing stocks over the last century. This analysis reveals why stock market wealth is concentrated in a tiny fraction of companies, challenging the assumption that broad market participation guarantees superior returns compared to safer alternatives.
Research by Hendrik Bessembinder of Arizona State University analyzed 25,967 common stocks between July 1926 and December 2016. The findings show that wealth creation is highly skewed: only 1,092 companies, or roughly 4% of the total, were responsible for the entire $34.8 trillion in net shareholder gains during this 90-year period.
The concentration is even more extreme at the top, with just 50 stocks generating 39.3% of that wealth. During these nine decades, the remaining 96% of stocks provided returns that failed to exceed the performance of low-risk, one-month Treasury bills.
