Here is an interesting chart that shows the expectancy of returns for individual stocks. Given the historically upward trend of Indices, the data isn't as favorable as I assumed.
Here are some key take-aways:
- The mean compounded annual return for all issues was negative.
- About two-thirds of all stocks had a compounded annual return of less than 10%.
- Moreover, 39% of all stocks had a negative lifetime total return.
It points to the importance of risk control, sensible diversification, and the ability to ride your winners. Wait, that is the foundation of successful investing … isn't it?
Note: The data for the chart covers all common stocks that traded on the NYSE, AMEX, and NASDAQ since 1983, including delisted stocks, with a few filters.