Most stocks are value-destructive — the median stock loses 7% over its lifetime — so the ability to identify the few that compound is the entire skill of investing.
Citing Hendrik Bessembinder's research, the host establishes that 73% of stocks fail to beat the market and the median stock loses 7% over its lifetime. This frames why Baron's buy-and-hold approach is difficult but essential. ✦ AI generated
Host · The Compound · 2026-07-24 · original ↗
starts at this moment · 34:17
Just 27% of stocks kept pace with the with the stock market. which is 27% of stocks meaning 73% lose versus T-bills only 42% of stocks over their lifetime beat treasuries only 48% delivered a positive lifetime return. So it's basically a coin flip of these companies are even going to make money for their shareholders over the time of their listing to the time they die or acquired or whatever. And then the median stock lost 7% over its entire lifetime. So most companies are trash and are not worth investing and certainly not buying and holding.
verbatim transcript · starts at 34:17
34:17Just 27% of stocks kept pace with the valuated with with the stock market. which is 27% of stocks meaning 73% lose versus T- billills only 42% of stocks over their lifetime beat treasuries only 48% delivered a positive lifetime return. So it's basically a coin flip of these companies are even going to make money for their shareholders over the time of their listing to the time they die or
34:44acquired or whatever. And then the median stock lost 7% over its entire lifetime. So most companies are trash and are not worth investing and certainly not buying and holding. And yet you guys have found a way to buy and hold stocks that have done the opposite that have generated astounding returns. Astounding returns. So I'm curious when did you have this insight? Like how did you know that the money was made by
35:14waiting? Because that is extraordinarily difficult. Josh mentioned you held wind for 27 years. It's like unheard of. So, how did that insight come to you so early and how are you finding the stocks that actually are worth buying and holding? >> Well, we do research, but some of it a lot of it comes from my background uh growing up. So, my dad was an engineer for the army and uh I would
35:39always ask him and and when I was 1942, he was making $2,500 a year. And then when I was bar mitzvah in 1956, he was making $10,000. And I would ask him all the time, "Are we middle class yet? Are we middle?" And that was when we got to be middle class in 1956. And uh and I noticed uh was couldn't miss it uh when I was growing up that so