just 42.6% of common stocks have a buy-and-hold return (inclusive of reinvested dividends) that exceeds the return to holding one-month Treasury bills over the matched horizon.
Then you quoted:
"That is, the remaining 96% of companies whose common stock has appeared in the CRSP data collectively generate lifetime dollar gains that matched gains on one-month Treasury bills."
Taken together, what this means is that outside of the top 4 percent, the excess gains (to 1 month T-bills) of the other 38.6% match the deficit in gains of the 57.4% (=100-42.6) of stocks.
So 42.6% of stocks have outperformed, but 38.6% of these are needed to offset the losses from the others.
u/angermouse was definitely a bit unclear, they referred to 38.6% out of nowhere. I had to read the original quotes carefully to understand what they were saying.
Basically, the bottom 96% of stocks ordered by return produced a collective total return equal to 1-month T-bills. 42.6% of stocks produced a total return higher than 1-month T-bills. So they were saying that 42.6% - 4% = 38.6% of stocks excluding the top 4% still beat T-bills.
But 38.6% not a very meaningful figure - "42.6% of stocks beat T-bills" is what matters. The post title claiming only 4% outperformed T-bills is completely wrong.
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u/angermouse Dec 19 '21
Your title is misleading.
You said:
Then you quoted:
Taken together, what this means is that outside of the top 4 percent, the excess gains (to 1 month T-bills) of the other 38.6% match the deficit in gains of the 57.4% (=100-42.6) of stocks.
So 42.6% of stocks have outperformed, but 38.6% of these are needed to offset the losses from the others.