Hello, Here’s a stat that stops a lot of people in their tracks:
Less than 4% of all U.S. stocks have been responsible for the market’s net gains going back nearly 100 years.1
That’s from a landmark study by Professor Hendrik Bessembinder of Arizona State University, titled Do Stocks Outperform Treasury Bills?1
When it was first published in 2018, it made waves. And now, newly updated data through the end of 2024 confirms what the original research showed:
A small handful of companies are responsible for almost all the market’s wealth creation.2
To put it in perspective, picking one of the long-term winners at random is a bit like rolling a 25-sided die and hoping to land on a single number.
Even more eye-opening? Just one-third of one percent of stocks created half of all the market’s lifetime gains. We’re talking about names like Apple, Microsoft, and Nvidia.2
Apple alone has delivered nearly $4.7 trillion in shareholder wealth. That’s almost 6% of all the wealth generated by the entire U.S. stock market since 1926.2
The top five stocks together? Over 21% of lifetime market wealth.2
The rest of the market? Most stocks either underperformed safe government bonds or lost value altogether.2
This happens, Bessembinder believes, because most companies struggle to grow or maintain market share. A few, on the other hand, create breakthrough products, dominate industries, or ride powerful long-term trends. Those outliers deliver gains so large, they carry the whole market.
That’s why stock returns aren’t distributed evenly. They're lopsided. A small number of big winners end up covering for thousands of smaller or failing companies.
So what does this mean for investors?
To be clear, Bessembinder’s study is based on historical data. It’s always worth emphasizing that past results do not guarantee future returns.
Additionally, the study also doesn’t say investors should avoid the stock market. Quite the opposite.
Historically, equities have represented one of the most powerful ways to build long-term wealth.
But the catch is this: most of those returns come from a very small number of companies, and it's nearly impossible to know in advance which ones will be the standouts.
Even professional investors, with research teams and advanced tools, rarely get it right year after year.
For individual investors, chasing the next Amazon might feel exciting. But statistically, it’s much more likely to end in frustration.
So instead of trying to guess which stocks will succeed, the study points to broad market exposure as a more reliable approach for capturing long-term gains.
With a diversified portfolio, you don’t have to find the needles. You already own the haystack!
That’s the beauty of broad market investing. You automatically capture the rare winners without needing to predict them.
Want to know how your current strategy stacks up?
This message is intended to educate, not to offer personalized advice. But if you're unsure what this means for your specific situation, let's talk about it.
No pressure. Just a helpful conversation about investing with confidence.
Sincerely,
Your Eagle Wealth Team
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Pumpkin BreadIt started out as a seasonal treat. Now folks enjoy it all year round. Here’s how to make it for yourself.
Ingredients: 2 cups all-purpose flour ½ teaspoon salt and baking powder 1 teaspoon baking soda, ground cloves, ground cinnamon, and ground nutmeg 1½ sticks (¾ cup) unsalted butter, softened 2 cups sugar 2 large eggs 1 15-oz can pumpkin Directions: - Preheat the oven to 325°F
- In a medium bowl, combine the flour, salt, baking soda, baking powder, cloves, cinnamon, and nutmeg. Whisk until well combined; set aside.
- With an electric mixer, beat the butter and sugar on medium speed until just blended.
- Add the eggs one at a time, beating well after each addition. Continue beating for a few minutes until light and fluffy.
- Add the pumpkin. Beat until combined. It’s okay if the mixture is grainy.
- Add the flour mixture and mix on low speed until combined.
- Pour the batter into greased 8x4” loaf pans and bake for 65-75 minutes. Let cool for 10 minutes.
Tip Adapted from Once Upon a Chef3 |
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The Week on Wall StreetStocks fell last week as investors assessed progress on trade negotiations, new U.S. tariffs, and fresh data on the U.S. economy.
The Standard & Poor’s 500 Index fell 2.36 percent, while the Nasdaq Composite Index declined 2.17 percent. The Dow Jones Industrial Average dropped 2.92 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, lost 2.95 percent.4,5 Action-Packed WeekStocks largely went sideways over the first half of the week as investors waited for more Q2 corporate results, fresh economic data, and the Fed decision.
The U.S.-E.U. trade agreement announced over the weekend had a muted impact on the market as the week began. Stocks then retreated as China trade talks appeared to stall, with the Dow declining the most of the three major averages through midweek.6,7
Stocks gained on Wednesday morning after the latest gross domestic product (GDP) report showed consumer spending powered the economy back to 3 percent annualized growth in Q2. That afternoon, the Federal Reserve announced they were holding rates steady, which put some pressure on stocks.8
Selling pressure continued on July’s final trading day as investors continued to fret about the Fed’s next move. The Personal Consumption and Expenditures (PCE) Index—the Fed’s favored inflation metric—showed a June uptick in core goods prices, unsettling investors.8
Stocks were under pressure from the opening bell on Friday as investors sorted through fresh tariff announcements from the White House, a softer-than-expected July jobs report, and mixed Q2 corporate reports from two megacap tech names.9,10 Mixed Economic SignalsThere was a trove of economic data for investors to parse last week.
First, there was economic growth. While 3 percent GDP growth in Q2 is a solid step up from a 0.5 percent contraction in Q1, consumer spending largely drove the increase, offset by slower business spending—especially investment in equipment and buildings.11
The PCE report showed why the Fed remains focused on inflation. Finally, Friday's jobs report pointed to a slowdown in hiring in July. A bit more concerning was that the jobs data from prior months were revised lower.
The Fed has no meeting in August, with three other meetings scheduled for 2025. |
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1. Journal of Financial Economics, 2018 [https://www.sciencedirect.com/science/article/abs/pii/S0304405X18301521?via%3Dihu] 2. W. P. Carey School of Business, 2024 [https://wpcarey.asu.edu/department-finance/faculty-research/do-stocks-outperform-treasury-bills#:~:text=Dec.%2031%2C%202022-,Updated%20spreadsheet,-%E2%80%94%20U.S.%20public] 3. Once Upon a Chef, March 18, 2025 4. WSJ.com, August 1, 2025 5. Investing.com, August 1, 2025 6. CNBC.com, July 28, 2025 7. CNBC.com, July 29, 2025 8. WSJ.com, July 31, 2025 9. MarketWatch.com, August 1, 2025 10. WSJ.com, August 1, 2025 11. WSJ.com, July 30, 2025 Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security. Copyright 2025 FMG Suite. |
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