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This is a segment from The Breakdown newsletter. To read full editions, subscribe. “Private markets are the new public markets.” — Matt Levine Because I was a professional trader for a long time, people have always asked me for investment advice. At first, I’d try to explain that traders don’t know anything about investing, but then they’d just ask me for trading advice, as if it were the same thing. (Full disclosure: Traders don’t know much about trading, either. It’s mostly luck.) Eventually, I stopped trying to explain the difference and started just offering the standard advice instead: Put it all in an US equities index fund.  For anyone young enough to ride out the volatility, that’s always worked out because the S&P 500 has returned about 8.5% a year since its inception in 1928. Over a decade or two, 8.5% a year is a lot — compound interest remains the eighth wonder of the world. But the vast majority of stocks don’t compound at all, which makes things difficult.  A study by Hendrik Bessembinder found that just 4% of stocks accounted for all of the net returns in US equity markets between 1926 and 2019.  4%! The other 96% of stocks, in aggregate, returned nothing. So, investors who missed out on Amazon (+225,089%), Nvidia (+407,612%) or Microsoft (+825,487%), are unlikely to have achieved that average 8.5% return — or anything close to it. (Bessembinder also cites the 265 million% lifetime return in Altria, but few of us have a 100-year investing lifetime, so I’m not sure how helpful that is.) This has always been the rationale for index investing: It’s impossible to pick the small number of stocks responsible for long-term equity returns (let alone resist the urge to sell them), so it’s best to buy them all via an…

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Filed under: News - @ July 2, 2025 10:28 pm