The most misunderstood fact about the stock market, and the data on it is unusually clear. Hendrik Bessembind…

The most misunderstood fact about the stock market, and the data on it is unusually clear. Hendrik Bessembinder (Arizona State) computed the lifetime return of every single one of the roughly 25,300 stocks that traded on US exchanges between 1926 and 2016. What he found: 57.4% of stocks underperformed one-month US Treasury bills over their entire lifetime. More than half never beat the safest instrument there is. Total net wealth created by the US stock market since 1926: about $35 trillion. All $35 trillion of it came from just 4.3% of stocks. 1,092 companies. The other 24,000+ produced net zero, combined. Five companies alone (Exxon Mobil, Apple, Microsoft, General Electric, IBM) account for 10% of all wealth created. The top 90 companies, 0.36% of the list, account for more than half of it. The conclusion is not "stocks are bad." The conclusion is that stock market returns don't live in the average, they live in the tail. The distribution is extremely skewed, skewness coefficient 154.8, and the median stock has a negative return. What that means in practice: if you hold only a handful of stocks, the likeliest outcome isn't matching the average, it's trailing it. The average is carried by a few extreme winners. If they aren't in your portfolio, that average never happens for you. This is also the mathematical reason most active funds fail to beat the index. Not a lack of skill, just the shape of the distribution. Bessembinder repeated the study in 2023 across 64,000 global stocks. The result held. Source: Bessembinder, "Do Stocks Outperform Treasury Bills?", Journal of Financial Economics, 2018. Not investment advice, just an observation about a distribution.