Let me give you the answer first, and then I'll explain it. If you're getting close to retirement one commonly recommended approach is maintaining a diversified portfolio. Now let me show you why, because there's a brand new study that makes this point better than I ever could - Hendrik Bessembinder's One Hundred Years in the U.S. Stock Markets, published in March 2026 through Arizona State University's W.P. Carey School of Business.
Hendrik Bessembinder, a finance professor at Arizona State University, went back and looked at 100 years of the stock market. Every single U.S. stock from 1926 all the way through 2025. Almost 30,000 of them. And what he found surprises just about everybody.
Here it is. Over that whole century, the typical stock actually lost a little money. So the middle-of-the-road stock, the median one, came out slightly negative. Fewer than half of all those stocks made any money at all over their lifetime. And nearly 60% of them did worse than as a short-term Treasury bill, which has historically been considered among the lower-risk investments.
But here's the flip side. Over that same 100 years, the stock market as a whole turned one dollar into about $15,000. That's roughly 10% a year. And it created something like $91 trillion of wealth for the people who owned stocks.
So how can both of those things be true at the same time? That's the part I really want you to slow down for, because once it clicks, you start thinking about your own money a little differently.
A few winners did almost all the work
The reason the whole market did so well while most individual stocks struggled comes down to a small handful of huge winners. The gains weren't spread out evenly across all those companies. Not even close. They were piled up in just a few.
Let me give you the number, because it's a stunner. Out of almost 30,000 companies, just 46 of them were responsible for half of all the wealth the market created over the entire century. 46. And if you widen it out a little, fewer than 4% of all those companies accounted for all of the market's gains above Treasury bills. The other 96%? As a group, they basically treaded water for the investor. Translation: According to the research, this 96% collectively matched the return of one-month T-bills.
Let's say you'd put money into a bunch of companies back in the day. Think about how many of them went bankrupt or just quietly declined significantly, were acquired, or ceased trading. If your money was tied up in those, you didn't just underperform. You may have lost much or all of it. That happens, and it happens a lot.
Now, you can probably name some of the giants at the top of the list that have driven a lot of this wealth creation. According to Morningstar's Dan Lefkovitz, the list of biggest wealth creators includes younger companies like Tesla, Alphabet, and Nvidia, along with longtime stalwarts like Coca-Cola, General Motors, and Johnson & Johnson. But here's what should keep any stock-picker humble. Most of these companies weren't obvious winners back when they started. Some of them didn't even exist for most of the century. To have picked them ahead of time and then held on through every scary drop along the way, you'd have needed a crystal ball. And nobody actually owns one of those.
And it's getting more lopsided, not less. An earlier version of this research that stopped at 2016 found it took 89 companies to account for half the market's wealth. Just nine years later, that number dropped to 46. So, the winners are pulling further and further ahead of everybody else.
Why this really matters as you get near retirement
When you were 35, a disappointing investment outcome may have felt more like a setback than a lasting obstacle. For many people, there were still decades of earnings ahead and time to recover from market declines. When you're 60, or 68, the math may be completely different. Investors often have a shorter time horizon and may be relying more heavily on accumulated savings to support future goals. As a result, understanding portfolio risk and the potential impact of concentrated positions can become increasingly important. That's why this study may be especially relevant for individuals approaching or living in retirement.
Let me paint with a very broad brush here. Concentrated positions may involve greater risk than a diversified portfolio. If most individual stocks underperform, and they do according to this research, then loading up on just a few names means you're betting you can land in that tiny winners' circle. Even names you love. Even your old company's stock. And historically, many individual stocks have underperformed broader market indexes and Treasury bills. For every winner, there were thousands of companies that disappeared or limped along below what a savings account would've paid you.
I see this most with company stock, and I see it all the time. Somebody retires, and they're sitting on a giant pile of stock in the one company they know best. It feels safe because it's familiar. But familiarity isn't the same as diversified. A single stock, even a great company, carries a potential risk that has nothing to do with how good your plan is.
So, here's the part people may miss. Diversification is designed to provide exposure to a broad range of investments, which may increase the likelihood of participating in the performance of companies that contribute significantly to overall market returns. Investors who own broadly diversified portfolios may participate in the performance of companies that become future market leaders without having to identify those companies in advance. You may own it along with everything else. And so the few big winners do their work right inside your portfolio, and the losers, which are each pretty small, may have less impact on the portfolio as a whole. Diversification has historically been a commonly used approach for gaining broad exposure to market returns while helping manage concentration risk.
And one more thing. Historically, many long-term investors have benefited from maintaining a disciplined investment approach rather than attempting to predict short-term market movements. Here's a simple example from the study. One of the best performing stocks of the past century earned about 16.5% a year. That's strong, but on its own it's not jaw-dropping. What made it incredible was compounding that return for 100 straight years. So the lesson isn't go find a magic stock. Instead, the research highlights the potential benefits of maintaining a disciplined, long-term investment approach and considering a diversified portfolio that aligns with your goals, objectives, and risk tolerance.
The reassuring part
While market volatility can be concerning, this research highlights the importance of focusing on long-term investment principles rather than short-term market movements. The bigger message here is actually a good one.
Historically, equities have generated substantial long-term returns, although past performance does not guarantee future results. So, the danger this research points to isn't owning stocks. The research highlights the risks that may be associated with concentrated positions in a limited number of securities and talking yourself into believing that picking winners is a retirement plan. And one commonly used approach is maintaining a diversified portfolio, along with cost awareness and a long-term investment discipline, and it's available to everybody. For many investors, maintaining appropriate diversification, managing costs, and taking a long-term approach are important considerations when developing an investment strategy.
The market doesn't ask you to be a genius. Successful investing does not necessarily require accurately predicting which individual securities will outperform. And as you head into retirement, those two things are worth a whole lot more than any hot tip.
The bottom line
So to oversimplify it. A hundred years of data suggests the market's long-term success was driven by a surprisingly small number of companies, and most individual stocks didn't keep up with the broader market returns. For somebody getting close to retirement, or already there, that's not a reason to avoid stocks. It underscores the importance of considering a diversified investment approach. Investors who own broadly diversified portfolios may participate in the performance of companies that become future market leaders without having to identify those companies in advance. And patient, so compounding has the time it needs.
Of course, everyone is different, and the appropriate mix depends on your goals, objectives, time horizon, and risk tolerance. But if a big chunk of your nest egg is invested in just one or two stocks, whether it's old company shares or a name you've gotten attached to, it may be worthwhile taking a fresh look at how concentrated your risk really is. And again, that's the kind of thing you want to talk through before it matters, not after.
While diversification cannot eliminate investment risk, history has shown the importance of avoiding excessive reliance on any single investment. A diversified portfolio may allow investors to participate in opportunities across a broad range of companies and asset classes while helping manage the risks associated with concentrated positions. Investors should periodically review their investment strategy to ensure it remains aligned with their goals, time horizon, and tolerance for risk.
Sources
Hendrik Bessembinder, "One Hundred Years in the U.S. Stock Markets," W.P. Carey School of Business, Arizona State University, March 2026. Available at https://wpcarey.asu.edu/department-finance/faculty-research/do-stocks-outperform-treasury-bills
Dan Lefkovitz, "Why Most Stocks Aren't Worth Owning," Morningstar, 2026. https://www.morningstar.com/stocks/why-most-stocks-arent-worth-owning
This article is for general educational purposes and isn't individualized investment advice. Everyone's different, and the right approach depends on your full financial picture. If you'd like to look at how your portfolio is set up for retirement, reach out and let's talk.
Diversification cannot assure profit or guarantee against loss in a declining market
Past performance does not guarantee future results All investing involves risk, including the possible loss of principal. The appropriate investment strategy for retirement varies based on an individual's financial circumstances, income needs, objectives, and risk tolerance. Companies mentioned are provided solely as historical examples and are not recommendations to buy, sell, or hold any security.
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