value investingWhat’s Behind the Numbers? A Guide to Exposing Financial Chicanery and Avoiding Huge Losses in Your Portfolio. Some really shocking numbers in here, investors can certainly learn a lesson from them.

Consider the longest secular bull market most people today have ever experienced, 1983 through 2007. Blackstar Funds studied all common stocks that traded on the NYSE, AMEX, and Nasdaq during this period, including those delisted.1 They then limited their research universe to the 8,054 stocks that would have qualified for the Russell 3000 at some point
from 1983 through 2007. During this period the Russell 3000, accounting for 98 percent of U.S. stock liquidity, rose nearly 900 percent, yet:

  • 39 percent of stocks had a negative total return. (Two out of every five stocks are money-losing investments.)
  • 18.5 percent of stocks lost at least 75 percent of their value. (Nearly one out of every five stocks is a really bad investment.)
  • 64 percent of stocks underperformed the Russell 3000. (Most stocks can’t keep up with a diversified index.)
  • A small minority of stocks significantly outperformed their peers.

Blackstar provides the stark reality supporting the last point: The best-performing 2,000 stocks—25 percent—accounted for all the gains. The worst performing 6,000—75 percent—collectively had a total return of 0 percent.

More data embedded below:

What’s
Behind the
Numbers?
A Guide to Exposing
Financial Chicanery and
Avoiding Huge Losses in
Your Portfolio
by ValueWalk.com