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Needle in a Haystack

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Step 3: Stock Pickers

Looking For A Needle In A Haystack Vanguard Group founder John Bogle has accurately described the practice of stock picking as “looking for a needle in a haystack.” Even if you are lucky enough to pick a stock that outperforms the market, there is no certainty of success, or even survival, in the future. In their book, Creative Destruction,53 McKinsey & Company consultants Richard Foster and Sarah Kaplan analyzed the companies of the original S&P 500 Index from 1957. Their findings shown in Figure 3-3 revealed that only 74 companies remained on the list in 1997, and just 12 of them ended up with returns that outperformed the index for the 41-year period through 1998. “As the ‘80s passed and we made our Figure 3-3

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