WorldCom, Lucent Technologies, Wachovia and Rivian Automotive: These companies are members of a dubious group, the worst stock market investments of the last century.
That lowly status is documented in a long-running study that has gotten far more attention for its depiction of the century’s best stocks. But it suggests that the most dangerous times for investors are when the market is high — and we may be in such a time right now.
The study, by Hendrik Bessembinder, a finance professor at Arizona State University, shows that most of the biggest losers since 1926 were tech companies. They included stocks that boomed during the dot-com era and in the halcyon days just before the financial crisis that began in 2007 — and many crashed when those boom cycles ended. WorldCom and Lucent Technologies were dot-com telecommunications giants. There were banks, too: Wachovia was on the verge of collapse when it was acquired by a competitor, Wells Fargo, in 2008.
Two of the worst companies began trading on U.S. public markets only in this decade. Both are electric car firms whose share prices at their initial public offerings were remarkably high. Their exorbitant prices reflected investor enthusiasm at the time for the budding industry, but set up shareholders for steep losses. One was VinFast Auto, a Vietnamese company that trades on the Nasdaq. The other was Rivian, which generated shareholder losses of $85.8 billion from its I.P.O. in November 2021 through this past December, according to Professor Bessembinder’s calculations.
Rivian jumped out at me as particularly noteworthy because its chief executive, Robert J. Scaringe, was paid more than $402 million in 2025, as I reported last month. That put him fifth in a ranking of the most highly compensated chief executives at publicly traded companies in the United States. Rivian may well have a great future, but the company is still unprofitable, and long-term shareholders have taken a pounding.
I’ve mentioned just a few of the firms with poor stock market performance. The companies at the bottom of the heap all had different characteristics. What they had in common was that their bad share performance occurred after their stocks were hot. First, they attracted enormous amounts of investor cash. Then the value of the shares evaporated.
I wrote last week about the most recent updates to Professor Bessembinder’s study. He demonstrated that a relative handful of elite stocks, headed by Apple, Nvidia and Microsoft, churned out spectacular returns that accounted for nearly all the profits for investors over the entire century.
At the same time, more than 96 percent of the stock market did virtually nothing for investors. The vast majority of stocks couldn’t even match the 3.3 percent average return of one-month Treasury bills — a return you could get month by month over the 100 years through 2025 without taking any appreciable risk.
Those negative findings made me curious. Professor Bessembinder shared the core of his study with me — a spreadsheet containing more than 29,000 stocks from a CRSP market index now run by Morningstar. (That index is the backbone of Vanguard’s Total Stock Market Index fund.) Professor Bessembinder’s spreadsheet is a numerical depiction of U.S. stock market history. As I scrolled to the very bottom, I realized that this trove revealed the worst disasters in the stock market over the last 100 years.
As Professor Bessembinder uses the term, “lifetime wealth destruction” is the flip side of wealth creation. The downfall of a stock market giant destroys far more investor wealth than the demise of a smaller company with equally poor share performance because these measures are both also connected to total market valuation. In addition, this approach accounts for stock dividends and buyouts, and the comparison with Treasury bills includes an inflation adjustment.
Staring at this list of disasters felt like rubbernecking after a car wreck. Morbid curiosity was undeniably one of my motivations.
Yet taking the time to learn what happened and why — and discovering whether there were any patterns behind these seemingly random disasters might prevent future nightmares.
Wealth Destruction
At the very bottom of the list, in 29,080th place, I found WorldCom. It filed for bankruptcy in 2002, amid an $11 billion accounting scandal that culminated in the fraud conviction of its co-founder Bernard J. Ebbers. The company wiped out $114.5 billion in shareholder wealth, according to Professor Bessembinder’s calculations.
That’s a lot of money, but it subtracted a mere 0.13 percent from all the wealth created in the market over the century. By contrast, Apple, the biggest winner in the last 100 years, created more than $5 trillion in stock market wealth for investors, accounting for 5.5 percent of all the wealth in the market.
That discrepancy startled me at first. Then I realized that the worst total shareholder losses from every company at the bottom of the list were much smaller than the gains of the happy few stocks that produced extraordinary gains.
That’s because of the way the stock market is structured. Your losses as an investor are capped at 100 percent — as long as you don’t use borrowed money — while gains can theoretically be infinite. But even if losses from individual stocks aren’t as great as gains from the big winners, overall, there have been vastly more losers in the market. Those losses add up.
The market is asymmetrical in another important way: The gains of the biggest winners are uniformly greater than the losses of the greatest losers. It turns out that the combined losses of the 10 companies at the bottom of the list accounted for less than 1 percent of all the wealth destruction in the stock market over the century. By comparison, the top 10 companies — including Nvidia, Microsoft, Amazon, Alphabet and other heavyweights — accounted for 29 percent of all wealth creation over 100 years.
There were thousands of companies that weren’t worth holding as investments. Only a comparative few made investors, as a group, considerably richer.
Losers Everywhere
One takeaway from all this is that the stock market is skewed toward losing. Flip a coin and the chances are minuscule that you’ll pick one of the relatively few great stocks. Most likely, in a random coin toss, you will end up with a loser. There’s a good chance that you will not hold any winners at all.
That’s an argument for broad diversification. If you pick stocks, you could easily create a portfolio of losers, if only because there are so many of them.
There are talented stock pickers in the world, of course, and it’s possible to beat these odds and outperform the market. But it’s not easy to do. Most people will probably be better off if they don’t try, and instead hold broad index funds that mirror the overall stock market, which has been buoyed by the biggest winners.
Perhaps the most significant lesson is that price really matters. That may be worth pondering now, with widespread enthusiasm for artificial intelligence driving the prices of popular stocks to new heights.
Companies may be wonderful in concept and execution — and free of scandal — but even that is not enough. If their price is too damn high, exciting companies won’t create wealth for investors. They will instead end up in the annals of terrible wealth destroyers.
