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Corporate Teenage Wasteland (with Aswath Damodaran)

Stay Tuned with Preet

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Is There Selection Bias in Concentrated Portfolios?

If you bought each of the stocks in the Dow 30, at the time they went public, you'd be incredibly wealthy today. The way to frame that experiment is to go back to 2000. Remember in 2000, we hadn't anointed Amazon as the winner yet. There are probably 10 companies that are all viewed like Amazon is having incredible potential. Put your money in equal amounts in all 10 and hold them for 20 years then look at the returns you'd have made across the 10. And guess what? Those don't look that great.

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