The Long View Hendrik Bessembinder: ‘Do Stocks Outperform Treasury Bills?’
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Sep 10, 2024 
Hendrik Bessembinder, a market design expert and professor at Arizona State University, dives into the intriguing question of whether stocks truly outperform Treasury bills. He discusses his research revealing that 57% of stocks have historically underperformed, emphasizing the role of dividends and market capitalization. The conversation also tackles the active versus passive investment debate, showcasing the complexities of stock return distributions and the need for diverse strategies. Bessembinder’s insights challenge conventional stock picking and highlight the importance of adapting to market changes.
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Most Stocks Underperform
- Most individual stocks fail to outperform treasury bills over their lifetimes.
- This surprising finding challenges common assumptions about stock market returns.
Skewness in Returns
- Positive skewness in stock returns explains why most underperform but the market overall beats cash.
- A few big winners drive market returns, while most stocks lag.
Stock Lifespan
- Many underperforming stocks disappear from the market due to delisting or acquisition.
- Most stocks have a shorter lifespan in the market than commonly assumed.