In March, Hendrik Bessembinder, a finance professor at Arizona State University, published a paper ("A Century of the American Stock Market") studying the investment returns of nearly 30,000 stocks in the US stock market over a full 100-year period from 1926 to 2025. The results are astounding.
Truth 1: The stock market’s long-term returns are astonishing
From 1926 to 2025, the annualized return of the US stock market value-weighted portfolio was 10.1%. If $1 in 1926 were invested in US stocks, it would become $15,041 in 2025; if invested in a one-month Treasury bill, it would become $25.34. The biggest risk is failing to beat inflation.
Truth 2: Only a little under 30% manage to beat the market
Among nearly 30,000 stocks bought and held, the mean return exceeds 300x, while the median is -6.9%. 48.22% of stocks deliver positive returns, 41.17% outperform contemporaneous government bonds, and only 27.6% beat the market.
Truth 3: The companies that truly create wealth are concentrated in just 3.72%; nearly 60% of companies destroy wealth
Using the author-defined metric “Shareholder Wealth Creation” (SWC)—i.e., net increases in wealth after subtracting bond returns from the same period—nearly 30,000 companies created a total of $9.1 trillion in net wealth. All of it came from the top 1,082 companies only, which is just 3.72%. Nearly 60% of companies reduced shareholder wealth. (The remaining companies offset the wealth losses of underperforming firms, meaning that 96.28% of companies’ gains and losses net out, and overall performance matches the result of investing in T-bills, without generating any net wealth increase.)
Truth 4: Winner-takes-all is accelerating
Wealth creation is highly concentrated in very few companies. The top five (Apple, Nvidia, Microsoft, Alphabet, Amazon) account for 21.4% of total net wealth created. Compared with data as of 2016 and 2025, the number of companies contributing half of the net wealth created fell from 89 to 46. The number of companies accounting for one quarter of net wealth dropped from 20 to only 8. Under the AI wave, the concentration of wealth creation is accelerating significantly.
Truth 5: Wealth creation champions: era dividends + moats
Among the companies that create the most net wealth in the Top 30, there are 10 technology companies, 5 in financials, 5 in consumer, 4 in healthcare, and 4 in energy/industrials. Their commonality: capture the dividend of their respective eras, occupy niche positions in the ecosystem, turn short-term advantages into long-term moats, and maintain dominance for decades. Their moats come from platform scale effects, customer switching costs, brand pricing power, and technological barriers.
Truth 6: The return-rate marathon champion: tradition, longevity, and compounding
Among the Top 30 companies with the highest cumulative returns, most are traditional industries, such as tobacco, food and beverage, defense/armaments, healthcare, and building materials. Their average annualized return is about 13.0%, but the average time since listing is 93.9 years (the average life span of a single stock is 11.7 years). It is precisely this seemingly ordinary but long-lasting compounding over decades that ultimately creates astonishing wealth.
Lessons for investors: The stock market as a whole creates astonishing wealth, far outpacing government bonds, but this is due largely to the exceptional performance of a small number of companies. The vast majority of stocks perform indifferently or even lose money. The AI wave will make the divergence even more extreme.
Just research views, not investment advice. $NVDA.US
