Stock returns are so skewed to the 4% of stocks that are...

Stock returns are so skewed to the 4% of stocks that are responsible for all equity market returns that have occurred in the past 100 years.

Statistically, it is virtually impossible to outperform an index over time since you would have needed to specifically own the tiny percentage of stocks that beat the index, and specifically avoid the vast majority of stocks that underperformed the index.

Individual stock picking turns investing from a positive sum game to a negative sum game. Index investing is like being the casino. Individual stock picking is like being the gambler.

https://x.com/SpencerHakimian/status/1817204536634728499


...the above post express precisely what this thread has been saying about Buy and Hold.

...now you know that over that extended long term period, you have a stock index chart (e.g Dow) that shows massive growth but in reality, only 4% of stocks account for all the returns (many went broke, even one-time great stocks like Eastman Kodak, Revlon).

...the median means the one in the middle e.g if you have 101 stocks, it is the one resting on 51st, a -7.4% return, therefore the bottom 50 is worse than -7.4% return and top 50 >-7.4%. But the mean is the average, so the top 4% may have chalked up many tens of thousands of percent in return to be offset by the laggards with negative returns.

....so if you invest in index now, a protracted underperformance of say tech stocks could result in a prolonged period of underperformance due to high tech weightage. Individual stock picking is only as good as what that company does over time, many have performed for awhile then subsequently underperformed and vanish over time, or get taken over when they underperformed.