The market’s big, deadly secret

  By Guest Blogger Sinan Terzioglu

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New research by finance professor Hendrik Bessembinder, covering roughly 30,000 publicly traded U.S. stocks over the past century, shows that long-term market wealth has been created by an increasingly small number of companies.

Although the U.S. stock market generated nearly $91 trillion in shareholder wealth over that period, most individual stocks contributed little to the total and many destroyed value altogether, highlighting how difficult successful stock picking has been and how that challenge has only intensified over time.

Bessembinder’s original study, which examined returns from 1926 to 2016 across 25,383 U.S. companies, found that just 5 firms accounted for 10% of total net shareholder wealth creation, 20 firms for 25%, 89 firms for 50%, 195 firms for 75%, and 1,088 firms for effectively all of it.

When the dataset was updated to include the most recent nine years, expanding the sample to 29,081 firms, the concentration of wealth creation increased even further, as shown in the table below. In this updated data, just 2 companies accounted for 10% of total net wealth creation, 8 companies for 25%, 46 for 50%, 208 for 75%, and 1,082 for 100%.

Click chart to enlarge

Across the nearly 30,000 stocks in the study, the average lifetime return exceeded 30,000%. However, the median return was -6.9%, meaning that more than half of all stocks lost money during their lifetimes.

Less than 42% of stocks managed to outperform Treasury bills, which earned roughly 3.3% annually over the past century. Only 28% of stocks beat the broader market during the period they were publicly traded. Over the full 1926 to 2025 period, less than 4% of firms accounted for all net U.S. stock market wealth creation. The remaining 96% merely matched or failed to beat Treasury bill returns.

Another finding that stands out is how quickly leadership among these firms turns over, reinforcing that long-term stock market wealth is driven not by a fixed group of winners, but by a small and continually changing set of companies.

As shown in the table below, of the 30 firms that generated the most shareholder wealth between 2017 and 2025, 19 were not among the top wealth creators through 2016.

Click chart to enlarge.

Over the first six decades of the sample, the median stock delivered a 63.6% return over a ten-year period and a majority outperformed Treasury bills. In contrast, during the most recent four decades, the median ten-year return fell to just 5.8%, and fewer than half of stocks beat Treasury bills. This divergence reflects the growing concentration of returns and is likely tied to the growth of younger, smaller, and riskier companies entering public markets in the last four decades, many of which failed to generate durable shareholder value.

Most publicly traded stocks have surprisingly short lives and make limited contributions to long-term market wealth. On average, a stock remained publicly traded for about 11.6 years, with a median lifespan of just 6.8 years. This reflects how frequently companies exit public markets through delistings, mergers, or failure. As a result, only a small fraction of stocks persist long enough and perform well enough to meaningfully drive overall stock market wealth creation.

Several forces help explain this trend. Technological change, global competition, and disruption are occurring at a faster pace than ever before. Business models that once dominated for decades can now become obsolete in a matter of years. Entire industries, from retail to media to technology, have been reshaped or overturned, often in ways that are difficult to foresee.

Many of the most successful stocks of recent decades would have been exceptionally hard to identify ahead of time. Companies such as Nvidia, Amazon, Netflix, and Apple all experienced long periods of skepticism, above-average volatility, and even existential risk before emerging as market leaders. At the same time, many well-known companies with compelling narratives failed to generate lasting shareholder wealth.

In summary, as disruption accelerates and competitive advantages erode more quickly, the evidence increasingly shows that consistently selecting successful individual stocks is extremely difficult.

The same challenge applies to actively managed mutual funds, which still represent a large share of Canadians’ investment assets, typically charge higher fees, and in most cases have underperformed low-cost ETFs.

Given this reality, long term investment success has been driven far more reliably by broad diversification than by attempts to identify future winners, making diversified, low cost, passively managed global equity ETFs the most consistent way for investors to capture long term equity market returns.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.  He served as vice-president of RBC Capital markets in New York City and VP with Credit Suisse in Toronto.

Source: https://www.greaterfool.ca/2026/03/29/the-markets-big-deadly-secret/