Lately there has been a number of studies, led by Hendrik Bessembinder of Arizona State University which says 4% of the publicly traded stocks accounted for all of the net wealth of the stock market since 1926. A mere 30 stocks account for 30% of the net wealth generated by the stock market and 50 stocks account for 40% of the net wealth. The number one company on the list is Apple, Amazon is 14th, other companies are Exxon Mobil, Facebook, Visa, Alphabet (Google), Microsoft and Berkshire Hathaway. It stands to reason if your investments do not include these stocks, your portfolio has not done as well.

In a recent article by Barry Rithhotz writing for Bloomberg News asks what should you do? One solution is to buy the index, however you will own the big winners and you will own the mediocre companies to. Another approach is to be selective and try to buy the winners.

Each approach has its plus and minuses. If you own the stocks and they are doing very well, do you take profits or let it ride? Another issue is each of the successful stocks on their way up had large downward swings of 50% or more, would you have kept them? Owning GM stock was a star until it went 2009. The important takeaway is finding the very best companies is a difficult thing to do.

Linking to dividend paying stocks, eventually the best performers pay dividends because the first rule should be to invest in profitable stocks for the idea is not to lose money. One can always add to your portfolio either through dividend reinvestment into the company or using the dividends to buy the best companies you can. Another choice is to ensure you have a fund similar to the SPDR Technology Select Sector (this is from State Street). The fund invests in 73 of the largest tech companies which have multiple names among the wealth creators list.

There are more questions than answers, till the next time – to raising questions.