Buy and hold long term winners.

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    “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.


    Interesting paper, thanks for posting it. Does it indicate an edge for cap weighted indices over equally weighted or price weighted indices (DJIA)? It would seem that those firms most successful in generating wealth over time would have the highest weighting in cap weighted indices. That’s certainly not to say that there aren’t periods of outperformance for etfs like rsp over spy, but in general it would seem the cap weighted indices would do better.

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