“Research by Hendrik Bessembinder, a professor at Arizona State University, has found that nearly 60 per cent of global stocks over the past 28 years did not outperform one-month treasury bills. That might seem a case for not investing in equities at all.
But the reason equity investing as a whole is thankfully still worthwhile is due to a small number of superstar companies. Bessembinder calculates that about 1 per cent of companies accounted for all of the global net wealth creation. The other 99 per cent of companies were a distraction to the task of making money”.
Extremely curious research. What this shows is a very very long term buy and hold usually is the way to make wealth. For the Joe six pack, it means buying the indices. For the savvy investors like Mr. Warren Buffett, it means keep the long term winners. These winners have durable moat.