Thought experiment: universe of 100 stocks. One of them returns 1000%, and the other 99 return 1% each. So the average return is 10.99%. Then, portfolios of 10 stocks are created at random. How many will beat the market? Equal to the chance of picking the big winner, only 9.6%.
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If you're right, this could make index investing even more attractive vs long-only stockpicking, and shortsellers could get more potential targets. But markets may price in winner-take-all dynamics to compensate.
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Depends on what your goals are (get rich vs super rich), but I agree with you. What happens if those companies stop going public? Could FAAG (imho Netflix doesn't belong on this list) be where they are as private companies?
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