This expert studied 64,000 stocks. Only these 46 were actually good for your wealth

Thursday, 12 March 2026

Research found that advice from friends and colleagues is cited as an important source of information for 85% of investors under the age of 35, and 61% of these investors also said they were using social media as a source for investment information.

There’s a value exchange that happens whenever we invest in the stock market: we accept more risk for the potential of better returns in the long run.

This is the reason so many of us delve into the stock market, picking companies or opting for managed funds rather than stashing our savings under the mattress.

Arizona State University Professor Hendrik Bessembinder doesn’t take market myths at face value. He interrogates data to find the truth behind the 'get rich' claims flooding our feeds.

“You might think that if you're a stock picker, it's roughly fifty-fifty,” Bessembinder tells Stuff, explaining that most accept that a stock might go up or down, depending on what happens in the market.

“But in the long run, the odds are against you, unless you know something the rest of the world doesn't.'

Bessembinder’s 2018 study of 26,000 US stocks (1926–2016) found that just 4.3% of companies created all net market wealth. Even more starkly, only 90 companies – a mere 0.33% – accounted for half of the $35 trillion in gains.

Professor of Finance Hendrik Bessembinder from Arizona State University.

Bessembinder recently updated his findings across a global study of 64,000 stocks and found that this concentration has increased even further, with only 46 stocks now driving half of all wealth creation.

Staggeringly, 95.7% of the market barely matched the returns of Treasury bills—the safest, most 'boring' investment you can make.

More than half of the stocks reduced rather than increased shareholder wealth, even when dividends were reinvested.

Bessembinder purposely doesn’t rely on simple percentage gains, focusing instead on the dollar growth over the long term. A penny stock could, for instance, rise 1000%, but this comes off a small base and doesn’t generate the dollar value in wealth you see over time with the larger wealth creators in the market.

So what does this mean for Kiwi investors?

The investing adage is that time in the market is a path to success, but that rule can wreck your wealth if you’re holding the wrong luggage.

As Bessembinder’s study shows, 60% of stocks actually destroy wealth over time. You don’t need to look far on the NZX to see this in effect over the last ten years.

Since 2016, Sky TV has dropped from $5 to $0.50, The Warehouse from $2.80 to $0.72, Fletcher Building from $7.50 to $3.35, and Air New Zealand from $1.75 to $0.47. (Air NZ data is adjusted to account for a dilution of shares in 2022).

Even accounting for the dividends paid on some of these stocks, those who have held onto them as individual shares over this period will not be impressed with the performance.

Making the wrong stock pick can severely hurt your wealth.

Indeed, Bessembinder says missing out on those key 46 stocks can greatly impact your wealth over the long-term.

Apple, Microsoft, Exxon Mobil, Alphabet, Amazon, Nvidia, Berkshire Hathaway, Altria Group (formerly Philip Morris), Johnson & Johnson and Walmart make up the top ten of wealth creators in the US market.

Tencent Holdings, Samsung, Taiwan Semiconductor, Toyota, ASML Holding, Nestlé, Roche Holding, Shell, LVMH and AstraZeneca were the top global wealth creators.

As the world has become more globalised, Bessembinder’s research suggests that wealth creation is a global winner-takes-all game.

For the New Zealand investor, it means you have to look beyond the local sharemarket to gain exposure to the companies driving wealth creation.

This is why most KiwiSaver growth funds invest significantly in international equities to ensure that local investors don’t miss out on the growth being driven in international markets.

Spreading risk

Before Bessembinder’s research, many assumed the average stock performed similarly to the average market return. The notion was driven by the idea that if the market goes up, then surely my stocks will too. But the entire market is, in fact, skewed by these few super companies that generate the most wealth.

Think of it this way: if Elon Musk walks into your local pub, the 'average' wealth in the room skyrockets. But you're still just as broke as you were before he ordered a drink.

Share markets are similarly skewed; a rising index doesn't mean every company is trending upward.

Bessembinder’s research has become pivotal in the rise of index funds, which track the performance of the biggest companies in the market. This spreads your risk and ensures you don’t miss out on the gains that come from those larger companies.

The most popular index fund among Kiwi investors is the S&P 500, which tracks the largest companies in the United States.

These indices allow you to diversify your risk while also getting exposure to the fastest-growing companies.

“The combination of diversifying your portfolio and time in the market has worked well for investors,” Bessembinder says.

“That would enable you to get a slice of the trillions of wealth creation.'

You don’t need to rely on the S&P 500 alone. There are also international indices that can give you exposure to some of the global powerhouses driving wealth creation outside the United States.

Passive-active investors

The other lesson to take from Bessembinder’s research is that we should interrogate the returns and fees being charged by managed fund providers.

Bessembinder warns against 'closet indexers' – active managers whose returns merely mimic the market. 'If you're going to be active, then be active,' he says, noting that managers must justify their fees through genuine outperformance.

If they’re offering little more than closet index investing, then this is something you could access for far cheaper by yourself.

He does, however, note that a good fund manager can build you a well-diversified portfolio that doesn’t concentrate as much of your wealth in one market or a small number of stocks – and this can be valuable during volatile times.

On that note, Bessembinder warns not to expect the market to behave the way it recently has in the coming decades.

“I’m not sure that the future is going to be as good as the past,” he says.

“There are some reasons to believe the next 40 years overall might not be as good as the last 40 years have been.'

So, which companies are you invested in? What have been some of your biggest investment mistakes? And how concerned are you about the concentration of wealth we’re seeing around the globe?