Treasury bills are loans to the US government that work much like cash. Most US stocks did worse than them. Only 42.6% of US common stocks listed from 1926 to 2016 beat one-month Treasury bills over their listed lives.
That is the central finding of a 2018 paper by Hendrik Bessembinder, a finance professor at Arizona State University. Here is what he found, why the stock market still beat cash, what his later studies added and what it means for a fund against a handful of shares.
What did Bessembinder find? Hendrik Bessembinder found that most US stocks listed since 1926 returned less than one-month Treasury bills over their listed lives. The stock market's whole gain over Treasury bills came from about 4% of companies.
From 1926 to 2016, only 42.6% of US common stocks beat Treasury bills, a form of cash, over their listed lives.
Just 1,092 companies, 4.3% of those listed, made all of the stock market's dollar gain above Treasury bills. In his update to 2025, 46 companies made half of a $91 trillion gain.
The pattern holds outside the US. From 1990 to 2020, 55.2% of US stocks and 57.4% of stocks elsewhere trailed US Treasury bills.
What is Bessembinder's "Do stocks outperform Treasury bills?" paper?
Hendrik Bessembinder holds the Francis J. and Mary B. Labriola Endowed Chair in Competitive Business at Arizona State University's W. P. Carey School of Business. His paper "Do stocks outperform Treasury bills?" appeared in the Journal of Financial Economics in September 2018.
He used the Center for Research in Security Prices (CRSP) database at the University of Chicago. It holds the monthly returns of every common stock, or ordinary company share, listed on the New York Stock Exchange, the American Stock Exchange and Nasdaq.
For each stock, he measured the buy-and-hold return: the gain or loss from buying at the start and holding to the end, with dividends reinvested. He used each stock's whole listed life. A life ran from July 1926, or the first listing, to December 2016, or the month the stock left the market.
He compared each stock with one-month Treasury bills held over the same months.
The paper's summary, or abstract, puts the result this way: "the best-performing 4% of listed companies explain the net gain for the entire US stock market since 1926, as other stocks collectively matched Treasury bills."
How many US stocks beat Treasury bills from 1926 to 2016?
Source: Hendrik Bessembinder (2018), Journal of Financial Economics; YX Insights
Chart 1 sorts the 25,967 stocks by their lifetime result. Only 49.5% made money at all. 42.6% beat one-month Treasury bills. So 57.4%, slightly more than four in seven, did worse than cash.
Just 30.8% beat the whole US stock market. Here the market is every listed stock, each counted by its market value. 11.8% of stocks lost essentially everything.
The typical stock was no winner. The median lifetime return was −2.29%. The median listed life was 7.5 years.
Why the stock market still beat Treasury bills: a few huge winners
The whole market beat cash by a wide margin, while most single stocks did not. The reason is positive skewness, a lopsided spread of results. A stock can lose at most 100%, but it can gain many thousands of %.
The mean lifetime return was over 18,000%, pulled up by a few giants. Only 2.2% of stocks beat that mean. The abstract names compounding as a second cause. Gains build on gains, so the best stocks pull further ahead each year.
How few companies created the stock market's wealth, 1926 to 2025
To show where the money came from, Bessembinder measured each company's wealth creation. That is the dollar gain for all its shareholders, above what the same money would have earned in Treasury bills.
Source: Hendrik Bessembinder, Arizona State University (public data); YX Insights
Chart 2 counts the companies behind each share of that gain. From 1926 to 2016, US stocks created $34.82 trillion above Treasury bills. Five companies made 10% of it: Exxon Mobil, Apple, Microsoft, General Electric and International Business Machines. 90 companies made half.
1,092 companies made all of it. That is 4.3% of the 25,332 companies in the data. The count is lower than the 25,967 stocks in Chart 1 because some companies, such as Alphabet and Berkshire Hathaway, had more than one class of shares.
The other 95.7% of companies, taken together, matched Treasury bills. Their winners and losers cancelled out.
In 2026, Bessembinder extended the work to 100 years, January 1926 to December 2025, with 29,754 stocks. His public spreadsheet shows a gain of $91 trillion above Treasury bills. Just 46 companies made half of it. In the 2018 paper, to 2016, it took 90.
Apple created the most wealth, $5.02 trillion. Nvidia came second with $4.58 trillion, followed by Microsoft with $4.03 trillion. Those top two alone made 10.5% of the century's gain.
Over the century, 48.2% of stocks made money over their lives. The median lifetime return was −6.87%. The share that beat Treasury bills was 41.17%, according to Morningstar's summary of the update, dated 17 June 2026.
Do global stocks beat Treasury bills?
In 2023, Bessembinder and three co-authors, Te-Feng Chen, Goeun Choi and K. C. John Wei, ran the same test on more than 64,000 stocks worldwide. Their study, in the Financial Analysts Journal, covers January 1990 to December 2020.
Over that span, 55.2% of US stocks did worse than one-month US Treasury bills. Outside the US, the share was 57.4%, the same as the US figure to 2016. The top 2.4% of firms made all of the $75.7 trillion in net global wealth creation. Outside the US, 1.41% of firms made all of the $30.7 trillion gain.
What Bessembinder's finding means for index funds vs picking stocks
An index fund holds every stock in a market index, in set proportions, as What Is an Index Fund? explains. A fund that tracks the S&P 500, covered in What Is the S&P 500?, is one example. Such a fund owns the few big winners by design, along with everything else. A portfolio of a few stocks can miss them.
The 2018 paper tests this with random picks. Each month, it picks a fresh set of stocks at random and weights them by market value. It links those monthly returns over ten years. It repeats this 20,000 times for portfolios of 1, 5, 25, 50 and 100 stocks, using data from July 1926 to December 2016.
Source: Hendrik Bessembinder (2018), Journal of Financial Economics; YX Insights
Chart 3 shows how often those portfolios beat each benchmark over ten years. A single random stock beat Treasury bills 47.8% of the time. With 25 stocks, that rose to 86.9%. With 100 stocks, it reached 93.1%.
Beating the whole market was harder. Even 100 random stocks beat it only 47.5% of the time, before fees and trading costs. The abstract says the results help to explain "why poorly diversified active strategies most often underperform market averages."
These figures describe random picks. They do not show that every stock picker trails the market. Systematic vs Discretionary Investing covers the evidence on rules and judgement.
The limits of Bessembinder's study
Failed listings weigh heavily. The paper finds the result is "primarily attributable" to stocks removed by their exchange. Those 9,187 stocks had a median lifetime return of −92.0%. The paper notes that avoiding them only helps if you can spot them in advance.
It looks backwards. The pattern held from 1926 to 2016, to 2025 and worldwide from 1990 to 2020. It does not name the next winners.
Winners fall too. Nvidia created the second-most wealth to 2025. Its shares also fell 89.7% in 2002, as What Is a Drawdown? shows.
Dollar gains favour big, long-lived firms. Bessembinder notes that some concentration was bound to appear, because companies differ in size and lifespan.
How to read Bessembinder's numbers
Check the benchmark. Beating Treasury bills and beating the market are different bars. From 1926 to 2016, 42.6% of stocks cleared the first, while 30.8% cleared the second.
Check median and mean. The median stock lost 2.29% over its life. The mean gained over 18,000%, because a few giants lift it.
Check the period and the market. The 2018 paper covers US stocks to 2016. The update runs to 2025. The global study covers 1990 to 2020.
Bessembinder's answer is yes: most US stocks have returned less than Treasury bills over their listed lives. The stock market's gain came from a small group of big winners, which a fund holding the whole market owns by design.
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Common questions about Bessembinder's study
What percentage of stocks beat Treasury bills?
On Hendrik Bessembinder's data, 42.6% of US common stocks listed from 1926 to 2016 beat one-month Treasury bills over their listed lives. The other 57.4% did worse. In his update to 2025, the share that beat them was 41.17%, according to Morningstar's summary of the update. From 1990 to 2020, 55.2% of US stocks trailed Treasury bills.
Do 4% of stocks account for all stock market gains?
Yes, on Bessembinder's 1926 to 2016 data. 1,092 companies, 4.3% of the 25,332 companies in the CRSP database, made all of the US stock market's $34.82 trillion gain above Treasury bills. The other companies, taken together, matched Treasury bills. Worldwide from 1990 to 2020, the top 2.4% of firms made all of it.
Which stocks created the most wealth since 1926?
Apple created the most shareholder wealth of any US company from 1926 to 2025: $5.02 trillion above Treasury bills, on Bessembinder's public spreadsheet. Nvidia was second with $4.58 trillion. Microsoft was third with $4.03 trillion. Together, the top 10 companies made 29.0% of the $91 trillion total.
What does the Bessembinder study mean for index funds?
It shows the risk of holding a few stocks: they can miss the rare big winners that a whole-market index fund owns by design. In his tests, portfolios of 25 random stocks beat Treasury bills over ten years 86.9% of the time, but beat the whole market only 45.4% of the time. What Is an Index Fund? explains these funds.
What is wealth creation in Bessembinder's research?
Wealth creation is the dollar gain a company delivered to all its shareholders, above what the same money would have earned in one-month Treasury bills. Bessembinder measures it over each company's listed life. From 1926 to 2025, US stocks created $91 trillion in total. Just 46 companies made half of it.
DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.