Low Odd Of Winning Stocks

Dec. 21, 2017 8:03 PM ET1 Comment
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Contributor Since 2017


  • Less than 7% stocks outperform the index.
  • So more than 93% chance you pick losers in your portofolio.
  • Index investing is best option for most people.

Easy Money - Creative Planning

"The odds of outpacing the averages are slim indeed. Consider a new study by Hendrik Bessembinder, a finance professor at Arizona State University. He looked at U.S. stock performance over the 90 years through December 2016.

His startling discovery: The market’s entire 90-year gain, over and above Treasury bills, could be attributed to just 1,092 companies, equal to 4% of all stocks. The other 96% collectively matched T-bills."

"S&P’s most recent analysis found that, over the past 15 years, just 7% of large-cap U.S. stock funds outpaced the S&P 500-stock index, 6% of mid-cap funds beat the S&P MidCap 400 and 6% of small-cap funds outshone the S&P SmallCap 600. The 15-year results for bond funds and international stock funds were almost as grim."

So picking stocks is not best choice for most investors.

"But why should it be easy to get rich?” - Charlie Munger

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