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Chart of the Day: One Third

Samuel A. Kiburz Apr 23, 2024
34% surrounded by green dots, 27% by yellow 39% by red

Contents

Today’s Chart of the Day from Aperio shows the percentage of individual stocks in the Russell 3000, which represents the 3,000 largest stocks in the US, and how they have performed since 1987. The performance is almost divided into thirds: 34% outperformed the overall index, 27% underperformed but had positive returns, and 39% lost money.

These statistics reinforce the Modern Portfolio Theory, a fundamental tenant of modern finance, by Harry Markowitz.* Quite simply, diversification is the name of the game. Since only 34% stocks outperform, it’s always better to own more stocks than less to make sure you own the right ones. 

*I have a picture of both Harry Markowitz and Jack Bogle, founder and chief executive of The Vanguard Group, on my desk.

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