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   Investment Thoughts - Academia

Do stocks outperform Treasury bills?
"All of the wealth creation can be attributed to the thousand top-performing stocks, while the remaining 96 percent of stocks collectively matched one-month T-bills."

 

Research by Hendrik Bessembinder, professor and Francis J. and Mary B. Labriola Endowed Chair in Competitive Business at ASU’s W. P. Carey School of Business, evaluated lifetime returns to every U.S. common stock traded on the New York and American stock exchanges and the Nasdaq since 1926.

 

Key findings

 

“The results also help to explain why active strategies, which tend to be poorly diversified, most often underperform,” says Bessembinder, who found that the largest returns come from very few stocks overall — just 86 stocks have accounted for $16 trillion in wealth creation, half of the stock market total, over the past 90 years. All of the wealth creation can be attributed to the thousand top-performing stocks, while the remaining 96 percent of stocks collectively matched one-month T-bills.

 

Bessembinder’s groundbreaking research has been covered extensively in major news outlets. He made available a spreadsheet containing lifetime stock market wealth creation data for each U.S. common stock since 1926, as well as the SAS computer program that generates the data, featured below.
 

 

Top 20 wealth creators from 1926 to 2017

 

If most stocks are underperforming, yet the market as a whole does well, the only way these two things can come together is that there are a few stocks doing really well that pull the whole market up. Click the infographic to see the the top 20 winning stocks.

 

 

Take a closer look >>

 

 

Link to Arizona State University, W. P. Carey School of Business, Department of Finance

 

 

Arizona State University, W. P. Carey School of Business, May 2018-Prof. Hendrik Bessembinder, Francis J. and Mary B. Labriola

11.11.2018


 

Themes

 

Asia

Bonds

Bubbles and Crashes

Business Cycles
Central Banks

China

Commodities
Contrarian

Corporates

Creative Destruction
Credit Crunch

Currencies

Current Account

Deflation
Depression 

Equity
Europe
Financial Crisis
Fiscal Policy

Germany

Gloom and Doom
Gold

Government Debt

Historical Patterns

Household Debt
Inflation

Interest Rates

Japan

Market Timing

Misperceptions

Monetary Policy
Oil
Panics
Permabears
PIIGS
Predictions

Productivity
Real Estate

Seasonality

Sovereign Bonds
Systemic Risk

Switzerland

Tail Risk

Technology

Tipping Point
Trade Balance

U.S.A.
Uncertainty

Valuations

Yield