Since 1926, Entire Market Gain Is Due To Four Percent Best Performers

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Mark Melin
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Why do active managers underperform broad-based stock indexes? Hendrik Bessembinder of Arizona State thinks he might have the answer. The vast majority of stocks have failed to outperform T-Bills, he points out in a study. It is only a small percentage of stocks that lead indexes higher. On a statistical basis, selecting individual issues means the odds are stacked against the stock picker from the start. [singleton] When Bessembinder looks at the title of his August 2017 study, “Do Stocks Outperform Treasury Bills?” he considers it “nonsensical.” After all, the fact that long-term stock market investments perform better than short-term, T-Bills…

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Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.