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Chart of the Day: Time is Your Friend

Samuel A. Kiburz Jan 16, 2024
five graphs with blue curves indicating time


Today’s Chart of the Day was sourced by my Crews Bank & Trust colleague, Jackson Garner, Trust Relationship Associate, from a research paper called, “Underperformance of Concentrated Stock Positions” written by Antti Petajisto at MIT in 2023.

The paper provides five charts, showing the distribution of returns of all stocks in the U.S. based on market capitalization from 1926 to 2022. At first, you’ll notice that the 0% return is in the center of the distribution over a one-month time frame; however, that 0% starts to migrate to the left over one, five, 10, and 20 years, meaning that the return of 0% is less and less probable as time went on. Of further note, the maximum positive return goes from 50% for the one-month time frame to over 1,000% for the 20-year time frame.

Time is your friend, and the more time you have, the better a friend it will be.

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