Do stocks outperform Treasury Bills?

Do Stocks Really Outperform Treasury Bills? A Story of Investing vs. Speculating

Imagine you’re standing at a crossroads: one path leads you to picking your own stocks, the other to working with a professional who helps you build a diversified portfolio. Which road gives you the best chance at long-term financial success? Let’s walk through this together.

The Surprising Truth from the W.P. Carey School of Business

Here’s a question I often hear: “Do stocks really outperform Treasury Bills?” The answer isn’t as simple as you might think. Hendrik Bessembinder’s research at ASU’s W.P. Carey School of Business found that since 1926, just 4% of all stocks accounted for the entire net gain in the U.S. stock market. The other 96%? They performed no better than one-month Treasury bills—essentially, the safest, most basic investment you can make.

So, what does this mean for you as an investor? If you’re picking stocks at random or chasing the next hot tip, your odds of picking a long-term winner are slim. Are you investing—or are you speculating?

Questions to Guide Your Investment Journey

Let’s pause and reflect. Ask yourself:

• Do I have the time and expertise to research individual stocks, ETFs, and mutual funds?

  • How much time would it take to read each prospectus? What about digging into 10-Ks and 10-Qs? Without thorough research, it’s easy to cross the line from investing into speculating.

• How much risk am I willing—and need—to take to reach my goals?

  • Investing always involves risk, but speculation often means taking on even more, sometimes without realizing it. Are you comfortable with that level of uncertainty?

• Am I diversifying my investments adequately?

  • Diversification can help reduce risk, but building a well-balanced portfolio takes knowledge, research, and a disciplined strategy. Are you confident in your approach, or would you benefit from professional guidance?

• How can I objectively measure my risk?

  • Tools like risk tolerance questionnaires and portfolio analysis can help, but do you know how to put those insights into action? What software or reports will you use to monitor your risk?

• How will I monitor my risk over time?

  • Do you have a regular review schedule? What events will trigger a deeper look at your portfolio? Are you prepared to adjust your strategy when your risk profile changes?

• How will I know when my portfolio risk has changed?

  • Life happens. Markets move. Your financial situation evolves. Will you recognize when it’s time to rebalance or make adjustments?

Investing vs. Speculating: What’s the Difference?

Bessembinder’s research is a powerful reminder: consistently picking winning stocks is incredibly difficult, even for professionals. Investing is about taking a strategic, long-term approach grounded in sound fundamentals. Speculating is more like gambling—chasing short-term gains and taking on outsized risks.

So, which path feels right for you? Are you prepared to do the heavy lifting yourself, or would you benefit from a guide who can help you navigate the complexities of investing?

Let’s Build Your Financial Future—Together

As your financial planner, my mission is to help you make informed, strategic decisions that support your long-term growth and financial security. Let’s create a plan that puts you on the path to success—one that’s built on research, discipline, and your unique goals.

This content is for informational purposes only and should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Diversification and asset allocation strategies do not assure profit or protect against loss. Indices mentioned are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results. Investing involves risk, including the potential loss of principal.

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer member FINRA/SIPC. Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Sterling Edge Financial LLC are not affiliated.