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There was lots of discussion on how many stocks you need to own , I remember Brendan (the site owner) suggesting 10 stocks is enough.
Sarenco popped up some stats that indicated holding 10 stocks is not enough . The point Sarenco made very well was that the bulk of stock market gains come from a tiny percentage of the stocks and if you miss one of these your likely to do no better than investing in bonds or just saving money in the bank.
I didn't just take Sarenco's word for it but researched it myself and as always he was in fact correct , that was enough for me to avoid individual stocks and go with the investment trust route.
Stock markets have delivered big long-term returns because of the stupendous returns earned by a tiny minority of companies. Bessembinder calculated that the US market has earned $32 trillion (€30 trillion) for investors since 1926. Of the 25,782 stocks in his sample, some $16 trillion (€15.1 trillion) in wealth creation was generated by just 86 companies. The top 1,000 stocks accounted for all of the $32 trillion wealth creation.
Put another way, one third of one per cent of stocks accounted for half of the overall market gains; less than 4 per cent accounted for all of the market gains; the remaining 96 per cent collectively generated lifetime dollar gains that merely equalled the amount earned through treasury bills.
There was lots of discussion on how many stocks you need to own , I remember Brendan (the site owner) suggesting 10 stocks is enough.
Sarenco popped up some stats that indicated holding 10 stocks is not enough . The point Sarenco made very well was that the bulk of stock market gains come from a tiny percentage of the stocks and if you miss one of these your likely to do no better than investing in bonds or just saving money in the bank.
I didn't just take Sarenco's word for it but researched it myself and as always he was in fact correct , that was enough for me to avoid individual stocks and go with the investment trust route.
Stock markets have delivered big long-term returns because of the stupendous returns earned by a tiny minority of companies. Bessembinder calculated that the US market has earned $32 trillion (€30 trillion) for investors since 1926. Of the 25,782 stocks in his sample, some $16 trillion (€15.1 trillion) in wealth creation was generated by just 86 companies. The top 1,000 stocks accounted for all of the $32 trillion wealth creation.
Put another way, one third of one per cent of stocks accounted for half of the overall market gains; less than 4 per cent accounted for all of the market gains; the remaining 96 per cent collectively generated lifetime dollar gains that merely equalled the amount earned through treasury bills.
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