Investing - Theory, News & General • Re: Better Example of Single Stocks Having Higher Risk Than Index

That graph is about volatility, and doesn't convey the true risk of individual stocks.


From https://assets.jpmprivatebank.com/conte ... -2021.pdf

Furthermore, more than 40% of all companies that were ever in the Russell 3000 Index experienced a “catastrophic stock price loss”, which we define as a 70% decline in price from peak levels which is not recovered.

Another way to think about concentration risk: how often would a family have been better or worse off owning cash, or the Russell 3000 Index instead of the concentrated position? As shown in the table, around 40% of the time a concentrated position in a single stock experienced negative absolute returns, in which case it would have underperformed a simple position in cash. And around 2/3 of the time, a concentrated position in a single
stock would have underperformed a diversified position in the Russell 3000 Index. While the most successful companies generated massive wealth over the long run, only around 10% of all stocks since 1980 met the definition of “megawinners”.

Statistics: Posted by venkman — Thu Sep 03, 2026 11:29 pm