Tuesday, April 14, 2009

"The Capitalism Distribution"

The following charts apparently appear in Meb Faber's new book the Ivy Portfolio. (h/t designing better futures who refers to a study done by Blackstar funds)

The study looks at individual stock returns from 1983 to 2007. Over this long time period 25% of the stocks were responsible for all of the gains.

Here are Blackstar Funds' interesting conclusions (my highlights in bold):
"39% of stocks had a negative lifetime total return (2 out of every 5 stocks are a money losing investment)
18.5% of stocks lost at least 75% of their value (Nearly 1 out of every 5 stocks is a really bad investment)
64% of stocks underperformed the Russell 3000 during their lifetime (Most stocks can’t keep up with a diversified index)
A small minority of stocks significantly outperformed their peers (Capitalism yields a minority of big winners that all have something in common)"

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