If you have ever found yourself wondering whether you should be picking individual stocks instead of holding boring index funds, the answer just landed in the form of one of the most striking pieces of long-term equity research published in years. Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University, has updated his landmark study of 100 years of U.S. stock market returns and the headline finding is the same as it has always been, only sharper. From 1926 through 2025, just 46 companies — out of nearly 30,000 stocks that have traded on U.S. exchanges over that century — generated half of the entire $91 trillion of wealth the broad stock market produced for investors. According to CNBC’s coverage of the new research, the median stock in Bessembinder’s sample actually lost money over its lifetime, returning negative 6.9% on a buy-and-hold basis.
Read those numbers again, slowly. Half of all stock market wealth generated by all U.S. equities for an entire century came from a group of names that, depending on how you count, could fit on a Greyhound bus. The other roughly 29,950 stocks, taken together, accounted for the other half — and inside that group, more stocks lost money than made money. The market’s enormous long-run return is not a story about the average company doing well. It is a story about a handful of extreme winners doing so well that they more than compensate for the much larger pool of mediocre and bad performers.
This is the single most important piece of evidence the indexing camp has against the stock-picking camp, and Bessembinder’s update of his work — first published in his much-cited 2018 paper and continually refreshed since — should change how every retail investor thinks about portfolio construction.
The 100-Year Math
Bessembinder’s headline numbers are worth pulling apart carefully because they have implications for everything from 401(k) allocation to retirement spending plans.
Across his full 1926-to-2025 sample, the value-weighted portfolio of all U.S. common stocks produced a cumulative return of $15,401 per dollar invested. That is the magic of compounding inside the broad market, and it is the engine that makes equity investing the most powerful long-term wealth-building tool available to ordinary households. By comparison, a one-dollar investment in U.S. Treasury bonds — the closest thing to a risk-free return that exists for U.S. investors — would have grown to just $25.34 over the same period.
In other words, the stock market beat Treasurys by a factor of more than 600 to one over the long run. That is the headline reward for accepting equity risk, and it is the reason every credible financial planner tells long-term savers to be in stocks for the bulk of their working years.
But the same data set delivers the warning. Of the nearly 30,000 individual stocks in Bessembinder’s sample, only 27.6% outperformed a one-month Treasury bill on a buy-and-hold basis. Roughly 60% of the stocks would have left an investor with less wealth than they started with. The median stock returned -6.9%. The arithmetic of equity returns is brutally lopsided: a small minority of companies pull the entire market up, while the majority either tread water or drag it down.
Bessembinder put the practical implication bluntly to CNBC: “There’s a big distinction between identifying these stocks looking back and trying to identify them going forward. The crucial question for investors is, do I think I have the skill?”
The 46 Names That Did the Work
The 46 firms that produced half of the century’s wealth share a profile that should make every armchair stock-picker pause. They are companies that survived for most or all of the 100-year sample and reaped the compounding benefit of being publicly traded for decades. Bessembinder identified the highest performers as including Altria (formerly Philip Morris), industrial company Vulcan Materials, and IBM, which started life as a punch-card system manufacturer before becoming the dominant computing company of the mid-20th century and then reinventing itself again as a services and AI business in the 21st.
Notice what is and is not in that short list. The single most successful long-run stocks were not always the most exciting growth names of their respective eras. They were companies that found a durable business model, defended it, paid dividends or reinvested cash productively for decades, and survived the structural changes that wiped out their competitors. Altria’s edge was monopolistic distribution and pricing power in tobacco. Vulcan Materials extracted aggregates from quarries that nobody else could easily replace. IBM rode three different technology waves in 90 years.
The implication is not that you should run out and buy these specific stocks today. The implication is that the kind of company that produces century-defining returns is rarely the kind of company that gets the most enthusiastic coverage on financial Twitter at any given moment. The 46 winners survived because their economics were durable, not because their narratives were exciting.
Why Professional Stock Pickers Lose to the Index
If the math against individual stock-picking were merely theoretical, you could argue that smart, professional investors would still beat the market. The empirical record says they don’t. According to the data Bessembinder cited from S&P Dow Jones Indices, 79% of large-company stock fund managers failed to keep up with the S&P 500 in the most recent year measured. That marked the 16th consecutive year in which more than half of professional managers underperformed the index they were ostensibly built to beat.
Sam Stovall, chief investment strategist at investment research firm CFRA, framed the lesson the way every plain-speaking strategist eventually does: “The reason you really don’t want to spend your time trying to [pick outperforming stocks] is how unsuccessful people who get paid a living to do this are.” If the people whose entire career depends on picking winners are losing to the index 16 years in a row, the retail investor staring at a Robinhood watchlist on a Tuesday night should be very, very humble about their own edge.
The mechanism here is not that professional managers are lazy or stupid. It is that the math of stock-picking is hard to beat. Once you account for trading costs, fees, taxes, and the difficulty of correctly identifying both the winners and the right time to enter and exit them, the active manager is fighting against gravity. The few who do beat the index do not stay ahead consistently — academic research shows that yesterday’s outperformers are essentially random predictors of tomorrow’s outperformers.
What This Means for Your Portfolio
The actionable conclusion from Bessembinder’s research is the same conclusion that John Bogle, Warren Buffett, and every credible long-term investor has been pushing for 50 years. If a tiny fraction of stocks produce the bulk of the market’s returns, and if you cannot reliably identify those stocks in advance, then the rational strategy is to own the entire market through low-cost index funds. By definition, the index will own all 46 of the eventual century-defining winners — along with all the losers, which collectively, in a value-weighted index, get washed out by the winners’ compounding gains.
This is the core argument for index fund investing, and it has held up across every long-run data set anyone has run. Casting a wide net via diversification means you do not need to be smart, you do not need to be lucky, and you do not need to time the market. You just need to be patient, keep costs low, and stay invested.
Doug Boneparth, a certified financial planner and the founder of Bone Fide Wealth, summarized the discipline cleanly: “What’s right for most retail investors is, participate in the market for the long term by being a passive investor, keeping your costs low and controlling your emotions when things get wild. These tried-and-true, long-term, very disciplined ways of going about investing are ultimately what work.”
The “controlling your emotions when things get wild” line deserves emphasis. Bessembinder himself reminded readers that the stock market is volatile in the short term and that a 50% drawdown in less than a year is well within historical experience. The investors who capture the long-run $15,401-per-dollar wealth machine are the ones who do not panic-sell into those drawdowns. The investors who try to time the dips and the rebounds, in practice, miss the recovery and underperform the index over a lifetime.
How to Build a Portfolio That Captures the Winners
The mechanical application of Bessembinder’s research, for a U.S. investor at any wealth level, looks something like this. Start with a core allocation to a broad-market U.S. equity index fund — a total stock market fund or an S&P 500 fund — held inside a tax-advantaged account like a 401(k) or IRA. This single position guarantees you will own every one of the next several decades’ century-defining winners, in their right value-weighted proportion, without having to identify them in advance.
Add an international developed-markets index fund and an emerging-markets index fund for global diversification, since the same wealth-concentration dynamic that operates in U.S. equities also operates in foreign equity markets, and there is no reason to assume the next round of global megawinners will all be domiciled in the U.S. Add a bond index fund proportional to your time horizon and risk tolerance — the closer you are to retirement, the more bonds — and you have a portfolio that captures essentially every dollar of future market wealth creation while limiting your exposure to any single failure.
Rebalance once or twice a year. Do not check your account during market panics. Keep contributing through the down quarters. The data is unambiguous: investors who do these things outperform investors who try to be clever, by a margin that grows wider the longer the holding period.
The Stock-Picking Caveat
There is a narrow case for individual stock-picking that Bessembinder’s research does not destroy. If you have genuine domain expertise in a specific industry — you ran a software company for 20 years, you spent a career as a pharmaceutical chemist, you built and sold a logistics business — your edge in that one industry is a real edge, and a portfolio that pairs broad index ownership with a small concentrated allocation to a few names you genuinely understand can be reasonable.
That is a long way from speculating in meme stocks because you saw a thread on social media. The Bessembinder research does not argue you can never beat the market. It argues that if you do not have a credible, identifiable edge, you almost certainly will not, and the rational base case is to own the index. Bessembinder told CNBC that some investors do have the skill to identify winners — but that for most people, the odds are stacked against them, and the right path is simply to participate in the long-term market through low-cost diversified vehicles.
For investors looking to layer in additional return through other asset categories, the same wealth-concentration dynamic suggests they should think carefully about where to add complementary positions without diluting the core indexing strategy that does the heavy lifting.
The Hundred-Year Bottom Line
The single most important takeaway from Bessembinder’s century of returns is this: the stock market is the most powerful wealth-building tool available to ordinary households, and the most reliable way to access it is to buy the whole thing and hold it for decades. The 46 century-defining winners will end up in your portfolio whether you sought them out or not, because the index owns them by definition. The losers will be there too, in their right tiny weights, getting drowned out by the compounding of the winners.
You do not need to be smart to capture this. You need to be patient, you need to keep costs low, and you need to keep contributing. Those three things, applied across a working lifetime, will produce more wealth than 99% of attempts to be clever. That is what 100 years of data says. The serious work of building wealth as a retail investor is mostly emotional discipline. Bessembinder’s research is the strongest mathematical case anyone has made for it.
