Stock markets have recovered but many individual stocks never will, as confirmed in JPMorgan’s aforementioned midyear report. It notes that while the broader Russell 3000 index is just 12 per cent off 2021′s highs, one of every four stocks in the index is down over 75 per cent.

This isn’t anomalous behaviour. Prior research from JPMorgan’s Michael Cembalest showed that historically, over 40 per cent of US stocks experienced a “catastrophic loss”, defined as a 70 per cent decline which is not recovered. Over the last three decades, half of Asian stocks have experienced “catastrophic” losses, according to another JPMorgan report earlier this year. That figure is even higher – 59 per cent – in Australia, and rises to an astonishing 85 per cent in Singapore.

[ ‘Extreme winners’ take it all while 40% of stocks suffer ‘catastrophic’ declinesOpens in new window ]

It’s common to come across articles noting how you’d have made gazillions if you’d invested in Nvidia or Apple or Tesla or some such stock back before they hit the big time. However, a concentrated stock portfolio is a risky portfolio – the odds of a catastrophic loss are much greater than casual investors might think.