Extreme Stock Market Performers, Part I: Expect Some Drawdowns

13 Pages Posted: 22 Jul 2020

Date Written: July 21, 2020

Abstract

Even those long-term shareholders who were rewarded with the greatest cumulative returns endured large price declines over shorter intervals. I study shareholder wealth creation for all publicly-listed U.S. common stocks during each of the seven decades since 1950. Focusing on the 100 most successful stock/decades in terms of shareholder wealth creation, I document even within the highly successful decade, shareholders experienced draw-downs that lasted an average of 10 months and involved an average loss of 32.5%. During the immediately preceding decade, draw-downs for these highly successful stocks lasted an average of 22 months and involved an average cumulative loss of 51.6%.

Suggested Citation

Bessembinder, Hendrik (Hank), Extreme Stock Market Performers, Part I: Expect Some Drawdowns (July 21, 2020). Available at SSRN: https://ssrn.com/abstract=3657604 or http://dx.doi.org/10.2139/ssrn.3657604

Hendrik (Hank) Bessembinder (Contact Author)

W.P. Carey School of Business ( email )

W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States

HOME PAGE: http://https://wpcarey.asu.edu/people/profile/2717225

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