Most Stocks Lose Money Over The Long Term?

An article from Money Magazine has some interesting statistics for all you buy and hold investors out there.

According to researchers at Dimensional Fund Advisors

• From 1980 to 2008, the top-performing 25% of stocks were responsible for ALL of the market gains during the period
• The other 75% of stocks in the U.S. recorded annual losses near 2%

Another dagger for buy and hold. Buy and hold in the simple form it is currently applied by so many investors can be extremely dangerous for your portfolio. The key is not buy and hold, even Warren Buffett would tell you that, the key is to buy and hold the RIGHT stock at the RIGHT price. Unfortunantly this task is a bit more difficult than buy and hold anything over the long term. This explains why Warren Buffett is Warren Buffett and you.. are NOT.

So if you want to make money over the longer term, you need to pick the top stocks right? As the article states, that is also a risky game because if you failed to own the top 10% of stocks in terms of performance your annual return would have been cut from 10.4% to only 6.6%.