Most Stocks Are Garbage: Why Just 4% Create All the Wealth
Since 1926, just 4% of publicly traded U.S. stocks have been responsible for the entire net wealth generated by the market.
For every Apple(AAPL) or Microsoft(MSFT), there are twenty companies that fade without a trace—and those winners hold the keys to real alpha.
Let that sink in.
The other 96% of stocks?
On average, they either performed no better than holding Treasury bills—or they destroyed value.
This happens to be in full alignment with the Pareto principle - 20% of stocks account for 80% of gains. And 20% of that top 20% account for 96% of profits.
If you're a stock picker, the odds are stacked against you.
But if you're a strategist?
There's an opportunity buried inside this uncomfortable truth.
The Bessembinder Bombshell
In a now-classic paper, Hendrik Bessembinder analyzed nearly 26,000 U.S. stocks across 90 years of data. His findings were shocking:
More than half of all individual stocks delivered negative lifetime returns.
Just 42% of stocks beat 1-month Treasury bills over their lifetimes.
The top 4% of stocks generated the entire net gain in market wealth.
Think about that: the median stock was a money-loser.
And most of the market’s long-term upside came from a handful of unicorns—companies like Apple, Microsoft, Exxon(XOM), and IBM(IBM).
The rest?
Wealth-neutral at best.
Or complete disasters at worst.
Why This Matters for Active Investors
If you’re picking stocks yourself, you need to internalize this:
You're probably picking a loser.
The stock market’s return is not “normally distributed.” It’s wildly skewed.
A diversified portfolio doesn’t just reduce volatility—it dramatically increases your odds of owning the outliers.
A poorly diversified portfolio? That’s like buying a lottery ticket with 96 losing numbers and four winners—and hoping you guess right.
Alpha comes from owning the few stocks that generate huge long-term wealth.
But finding them is hard—and most people don't even know what they’re looking for.
The Microcap Moonshot Edge
If you’re a microcap investor—or aspire to be one—this information isn’t a warning.
It’s a map.
You already understand that markets are asymmetric. The challenge is harnessing that asymmetry.
Like venture capital, microcap investing operates in a world where:
A few moonshots can carry your portfolio
Most picks won’t outperform
Research and discipline matter more than raw conviction
Your job isn’t to avoid volatility.
It’s to build a portfolio that survives the volatility and positions you to catch the next 10x or 100x winner.
Hunting the 4%: A Smarter Strategy
Here’s how smart microcap investors approach the game:
Play the numbers. Diversify across high-upside bets.
Do deep work. Don’t chase hype—look for early-stage companies with real signals of future dominance.
Manage risk like a professional. Know your downside, size your positions accordingly.
Think like a venture capitalist. You’re not trying to bat 1.000—you’re trying to hold the next Nvidia before the rest of the world sees it.
Microcap Moonshots screens for the very best stocks using a rigorous QVM framework. That’s Quality, Value, Momentum (download a free report at the bottom of the page HERE)
Final Word: Survival First, Alpha Second
Most investors won’t beat the market. That’s because most stocks aren’t worth owning.
But if you know the rules—and respect the math—you don’t need to be average.
You can aim higher. Just remember: to catch the 4%, you’ve got to stay in the game long enough to find them.
And Microcap Moonshots offers you just that opportunity.