Improving Stock Selection - Thematic October 2019

Unlike height or IQ, stock returns are not normally distributed and a few stocks account for almost all stock-market returns. Most stocks are simply not worth investing in, and most stocks fail to beat T-bills. The skewed distribution in favour of a few stocks has important implications for investors. Investors can either be completely agnostic and buy index funds to ensure they own the winners or they can try to identify long-term winners in advance.