The Sunday Drive - 06/15/2025 Edition [#167]

Musings and Meanderings of a Financial Provocateur

A Sunday Drive Around the Internet

👋🏼 Hello friends!

To all the dads out there, I wish you the happiest of Father’s Days.

Now, let’s enjoy a leisurely Sunday Drive around the internet.

🎶 Vibin'

As I reflect on the 27 years that have passed since I became a father, I recall the words of my uncle, who was really more of a grandfather to me. Back in my younger and wilder days, he once told me that I should “get married, have some kids, and amount to something.” I took those words to heart and am glad to say that I accomplished the first two. I continue working on the third each and every day.

While I am very proud of the young adults that my children have grown up to become, I really do miss the kid versions of them.

So, this week I’m vibin’ to Darius Rucker’s ode to fatherhood, It Won’t Be Like This For Long. Now, please excuse me while I reach for a tissue. 😢

💭  Quote of the Week‌

“I can buy anything I want, basically, but I can’t buy time. That’s the ultimate limited resource.“ — Larry Ellison

BONUS QUOTE
”I am third.” — Gayle Sayers

📈  Chart of the Week

This week’s Chart comes to us courtesy of my friend, Brent Sullivan at Tax Alpha Insider and his interpretation of Antti Petajisto’s paper, Underperformance of Concentrated Stock Positions.

The wealth building power of concentrated stock positions is often validated by personal success stories: an early Tesla bet, equity in a startup, or a long-held family position in Apple. But as the Chart shows, time turns even the brightest banana brown. Over longer horizons, single-stock risk compounds, not unlike the banana’s journey to mush.

Petajisto’s paper provides the data behind the visual. Analyzing ~3,000 U.S. stocks from 1926–2022, Petajisto finds that the median ten-year return on a single stock lags the market by 7.9%, and it’s even worse, –17.8% for stocks that were prior five-year winners. That means most long-held “winners” eventually underperform. Since WWII, that’s been true 93% of the time .

Why? Skewness. Most stock market returns come from a small handful of mega-winners—think Amazon, Apple, or Nvidia. While the upside on a single stock is theoretically unlimited, the downside is capped at –100%. The result is a long right tail but a mediocre median. This leads to a paradox: the average return looks attractive, but the median experience is underwhelming for the concentrated investor.

This is where diversification earns its role in helping preserve wealth. It doesn’t just reduce volatility, it boosts the probability of success. By spreading one’s holdings across sectors, styles, and individual names, investors are more likely to own the next generational winner while limiting the downside risk from those that never recover.

For those who have built wealth through concentration—entrepreneurs, early employees, or just lucky and patient holders, diversification isn’t a repudiation of what got you here. It’s the next logical step. Concentration might build wealth, but diversification is what helps you keep it.

🚙 Interesting Drive-By's 🚙

🤣 The Future of Work is Funny

💡 Hire Misfits, Not Missionaries

📈 What Should You Do When You Don’t Know What to Do?

🎯 Indexes Aren’t Passive

🤔 Solving Problems Without the State

🙌🏼 Notes From Charlie Munger’s 2007 Commencement Address at USC Law School

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👋🏼 Parting Thought

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If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I'd be honored if you'd share it with others.‌‌

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