Why owning individual stocks in a portfolio has a high probability of a negative outcome
By JAMES PARKYN & FRANÇOIS DOYON LA ROCHELLE
In this Episode, James Parkyn & François Doyon La Rochelle will be reviewing a paper published in July 2024 by professor Hendrik Bessembinder titles “Which U.S. Stocks Generated the Highest Long-Term Returns?”.
His findings in this research paper make the case that owning individual stocks in a portfolio has a high probability of a negative outcome.
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Read The Script:
1) INTRODUCTION:
François Doyon La Rochelle:
You’re listening to Capital Topics, episode #67!
This is a monthly podcast about passive asset management and financial and tax planning ideas for the long-term investor.
Your hosts for this podcast are James Parkyn and me François Doyon La Rochelle, both portfolio managers with PWL Capital.
In our podcast today we will review the findings from a research report from Dr. Hendrik Bessembinder published in July 2024 entitled “Which U.S. Stocks Generated the Highest Long-Term Returns?”
Enjoy!
2) WHY OWNING INDIVIDUAL SOCKS IN A PORTFOLIO HAS A HIGH PROBABILITY OF A NEGATIVE OUTCOME :
François Doyon La Rochelle:
We are back after a short summer break, I hope our listeners also enjoyed some time off. I will start this off. We believe our listeners will find Today’s topic very insightful. The mantra about stocks is that in the long run, you will make money despite the volatility in the short term. What gets lost in translation about this fundamental investing belief is that it only really applies to buying the market. Our regular Listeners know we preach broad market ETFs as optimal for most individual investors. So, it was interesting to see research that strongly supports this investing strategy. This summer an academic financial economist we follow, Dr. Hendrik Bessembinder - a professor at Arizona State University’s W.P. Carey School of Business - published a paper that makes the case that owning individual stocks in a portfolio has a high probability of a negative outcome. James, why don’t you report on Professor Bessembinder’s findings? …Read More
Links:
- Which U.S Stocks Generated the Highest Long-Term Returns? by Hendrik Bessembinder at Department of Finance, W.P. Carey School of Business – Arizona State University