The Meb Faber Show - Better Investing
Hendrik Bessembinder - Do Stocks Outperform T-Bills? | #532
May 3, 2024
Hendrik Bessembinder, a professor at Arizona State University, discusses his research on stock market returns with Meb. They talk about power laws driving returns, the importance of holding onto winners, shared traits among top stocks, and challenges of mutual fund performance. Hank's findings emphasize diversification and the difficulty of retaining big winners in a portfolio.
43:42
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Quick takeaways
- Power laws drive stock market returns with a few stocks generating significant wealth.
- Importance of holding onto winners in portfolio for long-term wealth creation.
Deep dives
Research on Stock Returns and Wealth Creation
Stock returns and wealth creation in the long term were discussed in the podcast episode. Professor Hendrik Bessembinder from Arizona State University shared insights from his research on stock returns spanning almost a century. The focus was on individual stock performance, questioning if stocks outperform the market as a whole. Bessembinder introduced the concept of shareholder wealth creation, emphasizing the importance of measuring wealth in dollars rather than percentages.
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