Today’s Chart of the Day is from a BlackRock research paper on concentrated portfolio risks. In it, they graph the top 25 performing stocks over the past 10 years, starting from 10 years ago, and their subsequent underperformance over the next 10. (Resulting in their total performance over the last 20 years.) The paper makes an impressive case to proceed with caution with examples from Yahoo, Sears, and GE. It also reminds us that 37% of all stocks actually lost money over the same 20-year period.
This reminds us of the famous quote from the father of modern finance, the great Nobel Prize laureate economist Harry Markowitz, who said on investing, “Diversification is the only free lunch in investing.”
About the Author
Samuel A. Kiburz
Samuel serves as Senior Vice President, Chief Investment Officer for the Crews family of banks. He manages the individual investment holdings of his clients, including individuals, families, foundations, and institutions throughout the State of Florida. Samuel has been involved in banking since 1996 and has more than 20 years experience working in wealth management.
Investments are not a deposit or other obligation of, or guaranteed by, the bank, are not FDIC insured, not insured by any federal government agency, and are subject to investment risks, including possible loss of principal.