Most stock market returns come from a tiny fraction of shares

One of the biggest safety-versus-risk puzzles is investing. Do you stick with modish companies, known as FAANG (Facebook, Amazon, Apple, Netflix, and Google), which have driven the S&P 500? Do you make an investment choice that seems to contradict what everyone else is doing? Most investors make a decision that feels safer than stocks in a declining industry.

Professor of Finance Hendrik Bessembinder's research emphasizes why in this article on The Economist June 23, 2018:

Since 1926, most stockmarket returns in America have come from a tiny fraction of shares. Just five stocks (Apple, ExxonMobil, Microsoft, GE, and IBM) accounted for a 10th of all the wealth created for shareholders between 1926 and 2016. The top 50 stocks account for two-fifths of the total. More than half the 25,000 or so stocks listed in America in the past 90 years proved to be worse investments than Treasury bills.

Hendrik Bessembinder, professor of finance and the Francis J. and Mary B. Labriola Endowed Chair in Competitive Business