Do shares outperform cash investments?
It seems like a silly question. Of course shares outperform, right?
Hendrik Bessembinder, a researcher and finance professor at Arizona State University, looked at the data to answer this question.
It turns out that 58% of the nearly 26,000 stocks traded on US markets in the 91 years from 1926 to 2016 failed to beat Treasury bill (cash investments) returns over their lives. Another 38% of shares barely beat Treasury bill returns.
96% of all shares either did not or barely outperformed cash!
That leaves us just the special 4% of shares, or 1,092 of the 26,000 US shares, that actually generated wealth for their investors.
If you went to a casino, and they told you you had a 96% chance of losing your money on any one bet, would you play that game? I certainly wouldn’t.
Click the image to download the PDF.
This is a great reminder why I don’t advocate share picking, sector picking, market timing, or country picking. Rather than looking for the needle in the haystack, let’s just buy the whole haystack. The worst performing shares will go to $0. The best can grow millions of percentage points.
From Bessembinder’s updated 2026 paper, One Hundred Years in the U.S. Stock Markets, he discovered that just 46 firms, or 0.15% of the 29,754 common shares listed on the public US stock markets over the 100 years from 1926 to 2025, generated half of the $91 trillion in net wealth creation.
Imagine trying to pick 1 random ball out of a 1,000 in a jar. It’s a nearly impossible task and relies on luck more than skill. Thankfully, we don’t need to do this. We can just buy the entire jar and reap the benefits of owning every company in the share market.
This concept, that only very few shares outperform cash investments, reminds me of the end of the Cold War movie “War Games,” where the supercomputer realizes that nuclear war is not winnable.
Picking shares is not a viable strategy for the vast majority of investors. In this case, the only winning move is not to play that game. Rather you should buy the whole global share market, at very low cost, keeping your investments diversified, automated, and simple.
