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Read our articles, some written for other publications, others written exclusively for the Kedrec audience.
Stocks vs. Indexes
This article was originally published in our weekly newsletter.
You’ve probably heard me say “The markets have recovered 100% of the time.”
It is intended to help you not panic whenever the markets crash next.
I’ve noticed many people today are starting to focus their portfolios on stocks.
Individual stocks don’t have as good a recovery rate.
Here’s what Morgan Stanley found:
Here’s what the above graph means:
About 54% of stocks never recover.
Those who do recover often take years to regain their previous level.
That may seem shocking until you realize that around 60% of US companies fail to grow faster than US Treasury Bills.
Only around 2% of companies account for the majority of the growth in the market.
The Takeaway
Broad diversification doesn’t make sense when you realize how few stocks contribute to growth.
Stock picking is risky if you are not diligent in monitoring your positions.
Diversify with thoughtfulness, not general ambiguity (buy a little of everything).
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This content on this website is provided for informational purposes only and is not intended to serve as the basis for financial decisions. It should not be construed as investment advice or a recommendation.
Investment advisory services are offered through Kedrec, LLC, a Kansas state Registered Investment Advisor. Insurance products and services are offered through its affiliate, Kedrec Legacy, LLC. We are not affiliated with the US government or any governmental agency.
Investing involves risk, including possible loss of principal. No investment strategy can guarantee success, ensure a profit or guarantee against losses. Insurance product guarantees are backed solely by the financial strength and claims-paying ability of the issuing company.
Insurance and annuity products involve fees and charges, including potential surrender penalties. Annuity withdrawals are subject to ordinary income taxes and potentially a 10% federal penalty before age 59-1/2. Life insurance generally requires medical and potentially financial underwriting to qualify for coverage. Optional features and riders may entail additional annual cost. Product and feature availability may vary by state.
Tax, legal and estate planning services are available only to members who purchase the Fresh Wealth Plan Membership level. Tax, legal and estate services provided by our network of tax and legal professionals. Always consult with qualified tax/legal advisors regarding your unique circumstances.
This content on this website is provided for informational purposes only and is not intended to serve as the basis for financial decisions. It should not be construed as investment advice or a recommendation.
Investment advisory services are offered through Kedrec, LLC, a Kansas state Registered Investment Advisor. Insurance products and services are offered through its affiliate, Kedrec Legacy, LLC. We are not affiliated with the US government or any governmental agency.
Investing involves risk, including possible loss of principal. No investment strategy can guarantee success, ensure a profit or guarantee against losses. Insurance product guarantees are backed solely by the financial strength and claims-paying ability of the issuing company.
Insurance and annuity products involve fees and charges, including potential surrender penalties. Annuity withdrawals are subject to ordinary income taxes and potentially a 10% federal penalty before age 59-1/2. Life insurance generally requires medical and potentially financial underwriting to qualify for coverage. Optional features and riders may entail additional annual cost. Product and feature availability may vary by state.
Tax, legal and estate planning services are available only to members who purchase the Fresh Wealth Plan Membership level. Tax, legal and estate services provided by our network of tax and legal professionals. Always consult with qualified tax/legal advisors regarding your unique circumstances.