Viewpoint

“Most stocks are duds... research [shows] that around the globe [most] individual common stocks have generated long-run shareholder losses relative to a Treasury-bill benchmark [short-term government debt]. The implication is that the large, long-term equity risk premium delivered by the broad stock market was attributable to outsize gains generated by a relatively few high-performing stocks... [research] demonstrates just how great the uncompensated risk is that investors who buy individual stocks (or a small number of them) accept... Such results help explain why active strategies, which tend to be poorly diversified... lead to underperformance... results... highlight the important role of portfolio diversification, the only free lunch in investing. Unfortunately, most investors fail to use the full buffet available.”

Larry Swedroe, Buckingham Strategic Wealth