43% of Stocks Lost Money in a Great Market

When someone says, “Stocks have been doing well the last few years,” it is important to remember that not all stocks are the same, and investors with concentrated portfolios may be experiencing very different results than those who own diversified funds.

Take this chart, for example.

Source: Google

The black line is the S&P 500. Over the past 5 years, the index has returned roughly 94%.

The bottom three lines show the performance over the same period for:

• Disney: -40%

• Target -43%

• Nike -55%

These are all large, well-run US companies included in the S&P 500, and they have all been terrible investments.

This is why diversification is so important. Over the last five years, while the stock market has been on a terrific run, 43% of individual US stocks have lost money.

Owning a combination of funds with hundreds or thousands of positions is admittedly less exciting than picking individual names, but the diversified strategy is much more effective at managing risk, and in retirement planning, nothing is more important.

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A quick note on crypto:

Harry Truman famously said, “The only thing new is the history you don’t know.”

In light of this week’s historic declines in crypto, it’s worth revisiting my note from last June -  Texas Wants Bitcoin. History Wants a Word: What gold, diamonds, and past manias can teach us about today’s crypto moves.

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Personal note:

One of my favorite side gigs is being the President of Fort Bend Panthers Rec Lacrosse. We have youth teams for grades pre-K through 8th, along with JV and varsity teams representing Ridge Point High School.

Last weekend, our 3rd- and 4th-graders won the pre-season tournament, as did our 5th- and 6th-graders.

If you have any kids or grandkids looking to try a new sport, I highly recommend they check out lacrosse.