Just 27.6% of Stocks Beat the Market, New Study Finds

According to ZeroHedge, a new study by Hendrik Bessembinder of Arizona State University's W.P. Carey School of Business found that just 27.6% of stocks beat the market from 1926 through 2025, while nearly 60% destroyed shareholder wealth. The research examined 29,754 publicly traded U.S. stocks and revealed that the median stock delivered a lifetime return of -6.9%, yet U.S. stocks collectively created roughly $91 trillion in wealth over the last century, with just 46 companies responsible for half of it.

Key takeaways
Just 27.6% of stocks outperformed the broader market from 1926 through 2025, according to the study by Hendrik Bessembinder.
Nearly 60% of stocks destroyed shareholder wealth, and the median stock delivered a lifetime return of -6.9%.
U.S. stocks collectively created roughly $91 trillion in wealth, with just 46 companies responsible for half of it.
Apple, Nvidia, Microsoft, Alphabet, and Amazon collectively account for more than one-fifth of all net wealth created by the U.S. stock market over the past century.

Table of Contents
What the study revealed
Why most stocks underperform
Concentration of wealth creation
Top wealth creators
Why diversification matters
What to watch next

What the study revealed

Hendrik Bessembinder analyzed 29,754 publicly traded U.S. stocks between 1926 and 2025, according to the source context. Over that period, the overall stock market produced an annualized return of about 10.1%, turning every dollar invested into more than $15,000. However, the typical stock fared far worse. The median stock lost 6.9% over its lifetime, fewer than half of all stocks generated a positive lifetime return, only about 41% outperformed Treasury bills during the time they were publicly traded, and just 27.6% managed to outperform the market itself.

The research paints a striking picture of how wealth is actually created in the stock market. While broad market indexes have generated exceptional long-term returns, the vast majority of individual stocks have failed to keep pace. The study's findings highlight the wide gap between aggregate market performance and the performance of individual stocks, a distinction that matters for investors evaluating stock selection strategies versus index investing.

Why most stocks underperform

The reason most stocks underperform is simple, according to the source context: stock market returns are incredibly uneven. While any stock can fall to zero, there is effectively no limit to how much a winner can rise. Over long periods, a tiny number of extraordinary companies generate gains so large that they more than offset the thousands of stocks that stagnate, disappoint, or disappear altogether. Those rare winners account for an outsized share of the market's overall success.

For investors, this uneven distribution of returns helps explain why stock selection is challenging. The study found that nearly six out of every ten companies actually reduced shareholder wealth relative to simply investing in one-month Treasury bills. This suggests that the majority of stocks fail to deliver returns that justify the additional risk of equity ownership, while a small minority of exceptional performers drive the bulk of market gains.

Concentration of wealth creation

Perhaps the most surprising finding is that this concentration has become even more extreme, according to the source context. In Bessembinder's original research covering 1926 through 2016, 89 companies accounted for half of all shareholder wealth created by the U.S. stock market. After adding the last nine years of data, total wealth creation more than doubled to roughly $91 trillion, yet the number of companies responsible for half of it fell to just 46.

Out of more than 29,000 companies included in the study, just 1,082, less than 4% of the total, were responsible for all of the market's net wealth creation. This extreme concentration suggests that the stock market's aggregate returns are driven by a remarkably small subset of companies, while the majority of stocks contribute little or nothing to overall wealth creation. For readers following broader market updates , this finding can help frame the importance of diversification and the challenges of active stock selection.

Top wealth creators

At the top of the list are many of today's biggest technology names, according to the source context. Apple ranks first, generating more than $5 trillion in shareholder wealth, followed by Nvidia , Microsoft, Alphabet, and Amazon. Collectively, those five companies account for more than one-fifth of all net wealth created by the U.S. stock market over the past century, while Apple and Nvidia alone make up more than one-tenth of the total.

The study also pushes back against the idea that market legends are built on impossible annual returns. Many of history's greatest investments didn't earn 50% or 100% per year. Instead, they compounded at annual rates in the low to mid teens over extraordinarily long periods. The lesson is that consistent returns sustained over decades are often far more powerful than eye-popping gains that prove impossible to maintain.

Why diversification matters

For investors, the findings reinforce one of the strongest arguments for diversification, according to the source context. While the stock market as a whole has created enormous wealth over the past century, identifying the relatively small group of companies that ultimately drive those returns has always been exceptionally difficult. Missing just a handful of those long-term winners can dramatically reduce investment results, which helps explain why broad index funds have consistently outperformed most active stock pickers over long horizons.

The study's findings suggest that even skilled investors face significant challenges in identifying future wealth creators before they emerge. Because the majority of stocks underperform and only a small minority drive aggregate returns, a diversified approach that captures the entire market may offer a more reliable path to long-term wealth creation than attempting to select individual winners. This insight is particularly relevant for investors evaluating the trade-offs between active stock selection and passive index investing.

What to watch next

Bessembinder concludes that the tendency for a small number of companies to drive most of the market's returns is unlikely to disappear because it is a natural consequence of how returns compound over time, according to the source context. The bigger question, he suggests, is whether technologies like artificial intelligence will make wealth creation even more concentrated in a handful of dominant firms, or broaden the playing field enough to create the next generation of market leaders.

Investors may watch for future research updates that examine whether the concentration of wealth creation continues to intensify or whether new technologies enable a broader set of companies to generate exceptional returns. The study's findings also raise questions about the long-term performance of active investment strategies and the role of diversification in capturing the market's rare but powerful wealth creators. Readers can access the full white paper for additional detail on the study's methodology and findings.

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