Everyone loves the story of the investor who bought Apple in 1997 or Nvidia before the AI boom and rode it into retirement. Those stories make stock picking look simple: find great companies, buy them, hold them, and retire wealthy.
However, when you look at the actual historical math behind individual stocks a very different picture emerges. Stock picking isn’t just difficult because markets are unpredictable—it’s difficult because the odds are structurally stacked against individual companies.
1. Even the Greatest Winners Will Test Your Patience
Take Apple—one of the most successful companies in human history. Since its IPO in 1980, it has delivered life-changing returns. Yet holding it required surviving three separate crashes of roughly 77% to 82%, including an eight-year stretch in the 1990s where the stock generated a negative total return. Even in the modern iPhone era, Apple has dropped more than 30% five different times.
Source: Historical split-adjusted market pricing data from NASDAQ / S&P Capital IQ / CRSP (December 1980 IPO through 2026).
Most investors don't hold through an 80% collapse. If you're in the middle of an 80% drawdown your mind is telling you to get out before it goes to 0. Many investors sell on the way down to stop the pain and never buy back in after the recovery begins. Even if you had the fortitude to hold it through the first 80% drawdown, would you have had the stomach to endure 2 more? For most people that answer is probably no.
But stomaching gut-wrenching drawdowns isn't the only challenge...
2. Most Stocks Don’t Survive—Or Barely Break Even
Looking back at the 500 companies in the S&P 500 in 1990....fewer than 30% of them still exist as independent, publicly traded companies today. Roughly 5% to 8% went bankrupt, while the vast majority were acquired, broken up, or taken private along the way.
Zoom out to the entire U.S. stock market since 1926, and the numbers get even starker:
Nearly 60% of all individual stocks fail to outperform basic one-month Treasury bills over their lifetimes.
More than 40% suffer a drop of 70% or more and never recover.
Virtually all of the net wealth created by the stock market over the last century comes from just the top 2% to 4% of companies.
Source: Prof. Hendrik Bessembinder (Arizona State University, W. P. Carey School of Business), "Do Stocks Outperform Treasury Bills?" (Journal of Financial Economics, 2018, with longitudinal updates covering 1926–2023/2025).
Source: J.P. Morgan Private Bank / Asset Management (Eye on the Market by Michael Cembalest), "The Agony & The Ecstasy: The Risks and Rewards of a Concentrated Stock Position" (2014 and 2024 Part IV updates).
3. The Index Beats Most of the Stocks Inside It
Even if you limit yourself strictly to large, established S&P 500 companies, picking winners is a tough game. Over any 10- to 20-year period, only about 1 in 4 S&P 500 stocks actually beats the S&P 500 index itself.
Why? Because of asymmetric math. An individual stock can only lose 100% of its value, while a breakout giant can gain 1,000% or more. Because the S&P 500 is weighted by company size, a tiny handful of massive winners pulls the entire index upward—leaving roughly 75% of the companies inside it trailing behind. Miss just two or three of those generational outliers, and your portfolio falls behind the market.
4. Even The Pros Struggle
According to S&P Dow Jones Indices’ SPIVA U.S. Mid-Year 2026 Scorecard (measuring data through June 30, 2026), the overwhelming majority of active large-cap managers fall short of matching the S&P 500's returns over the long-term.
| Time Horizon | % of Active Large-Cap Funds That Beat the S&P 500 | % That Underperformed the S&P 500 |
| 1 Year (through mid-2026) | ~33% | ~67% |
| 10 Years | ~16.7% | ~83.3% |
| 15 Years | ~9.5% | ~90.5% |
| 20 Years | ~7.4% | ~92.6% |
Looking at this chart....93% of professionally managed funds chasing the S&P 500 failed to beat it over the past 20 years. These are funds run by teams of economists and analysts whose sole purpose is to study the stock market and find an advantage, and most still fail to outperform the index. Picking individual stocks is a hard business.
Why Indexing Solves the Problem
When you own a broad index fund, you don't have to guess which companies will be the next Apple or Nvidia—and you don't get wiped out when yesterday’s giant turns into the next Sears or Kodak.
An index fund acts as a self-cleansing engine. As struggling companies shrink, they quietly fade to a tiny fraction of your portfolio before dropping out altogether. Meanwhile, the rare, massive winners naturally grow to take up a larger share of your returns.
Indexing lets you own the entire haystack—guaranteeing you never miss the needles that drive almost all long-term wealth.
And indexing can generate life-changing wealth, too. A $10,000 investment into the S&P 500 in 1980, if left untouched, would be worth $2 million today. You don't have to pick the rare stock winners to become a millionaire. You just need to own the haystack and hang on for the long-term.
Why Indy Wealth
At Indy Wealth we don't fight the data. We don't promise to outsmart the indexes. We don't pretend to have the secrets to stock picking. We don't put our clients at risk of catastrophic losses in individual stocks that could derail their retirement plans.
We set reasonable expectations and we build a financial plan that works based on the long-term average returns of the broader market and is not dependent on finding that needle in the haystack to get you where you need to go.
If you want to own individual stocks, great, we can do that. But the vast majority of our portfolio models will focus on capturing the long-term returns of the indexes and we'll be there to coach you through the ups and downs of the market to help you avoid making mistakes with your money along the way. Even when you're investing in the broad indexes, your patience and resilience will be tested from time to time. Market-wide drawdowns happen all the time, and they're painful. But the worst thing you can do is to succumb to those painful moments. At Indy Wealth we are committed to educating our clients on what to expect as long-term investors and arming you with the information necessary to make sound decisions about your investments, especially when the going gets tough.
Securities and advisory serviced offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. The opinions expressed in this material do not necessarily reflect the views of LPL Financial. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referred is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The primary benchmark for the large-cap market is the S&P 500 index. The S&P 500 index is considered the benchmark for the US Stock market. It is an index of approximately the largest 500 companies based on market capitalization.