Beating the S & P 500

Since I was a teenager and started paying attention, I've watched people try to beat the lottery, casino, and stock market. Legions of people give it a shot, thinking they might be the chosen one.

A few will even indicate they have beaten it or they can do it at will. Those folks remain mysterious with vague descriptions of their approach.

The forums are home to countless people who have indicated they can make a lot of money day trading. The generally cited return is $4000 per day. The generally cited reason they stopped day trading long ago is that it was too much work. I would blow a goat for $4000 per day. Too much work... lmao!

There are ways to make more money than the S&P. They involve business. A number of businesses have made significantly more than the 10% average returned by the S&P over the last 30 years. Those businesses require skill, wisdom, energy, and hard work to get going and keep going but it can be done.

Perhaps I'm jaded but when I hear someone claim to beat the S&P, it's like someone telling me they have discovered perpetual motion. I don't need to keep reading to know they are either charlatans or misguided.

In your case, I have no doubt you will continue looking for the holy grail. You're going to have to lose to the S&P for a long time before you give up. This post isn't intended to advise you. Pretty much everyone on this site will continue looking for the lost scrolls, right along with you. Carry on.

Me... I'm going to keep reinvesting monthly distributions of the companies I own directly and I will keep some money in a broad market index. It's totally boring. Investors don't need a forum to discuss what we didn't do today. lol! My investing is exciting for the moment because I'm working on sinking a windfall into the market but, most times, it's like watching paint dry. A healthy chunk has been put into some convertible debentures. The debentures pay less than the broad index average return but they provide assured income which is important to people like my wife and I who are living on a fixed income.

I really do wish you well, ElectricSavant. It would be so exciting if you were to figure out the secret to beating the S&P index. I will continue to follow you so I have something to do between re-investing distributions and trying to enjoy retired life. Best wishes.

 

I just re-read my post and it doesn't represent how I feel about the topic of beating the broad indices.

It's not all that hard to beat the S&P500. Many have done it. I've done it. The difficult part comes in beating it consistently over time. That's where it's pretty much impossible.

Oh sure, the front runners do it. Inside traders do it. Perhaps a handful of people have even done it honestly but it's a lottery win. The odds of beating the broad market index are near zero.

Jack Boggle built an empire on the fact it's nearly impossible to beat broad indices.

His book is extremely interesting, if you have the time.

I traded stocks back in the mid 1980s to the mid 1990s. I did very well, too. It wasn't until I looked back, objectively, that I realized everyone was doing well. The market was exploding. I thought I was smart but I was mostly lucky. When the market dried up after the dotcom bubble, I didn't do so good. Funny that.

I think trading is in all of us. We all want to take a shot at beating the rigged carnival game. Step right up....

 

This is fertile ground for me so I'm going to continue prattling on.

Unforseen by me, investing evolved into a study of objectivity early on. I've come to believe we are all able to believe what we want to some degree. Many people can believe anything. How many people believe in ufos, big foot, and Elvis returning from the dead? I mean, really believe it. Religion did not sweep the population by accident.

Success has required a deep dive into my own objectivity. If I know I'm not objective, I apply some compensatorial bias to counteract my own. It has been substantially effective, if not perfect.

What a journey. I went from believing in people to thinking everyone is a liar, back to believing in people again but with a better understanding of their flaws.

It took me 25 years to get where I am. My view on objectivity hasnt evolved in the last decade but it's still difficult to know if it will evolve from here. I may never get it.

A tool that can be used to inject objectivity into an investing approach is to divide your money in half and put 50% into the s&p. From there, promise yourself you will stop when the s&p is 66% of your account. I've found it to be an effective system.

I will also point out there is more to investing than just buying stocks and playing with virtualized money. I own two businesses that I consider to be successful. Certainly, they produce better than the markets. Don't underestimate the power of business. Lots of ways to make money.

Have a great evening, ES.

 

Vix put writing is one of my favs

 

Why would you quit the first time it dips below the S&P500? What if it steams back strong and overtakes?

I'm serious.

Wouldn't it make more sense to put together a bunch of ideas and strategies, then watch how they would perform over a period of 5+ years, while your money is in an S&P500 index fund?

That sounds pretty good, to me. Keep in mind, S&P500 index funds don't perform as well as the S&P500, either. They all have management overhead and tracking error. The largest funds tend to have the least error and the lowest overhead.

 

I've enjoyed your thread. Thanks. I'd like to add two more points to your thread.

1) In November 2018, shortly before his death, Jack Boggle said that index funds were getting too big

2) ARK Invest has outperformed the S&P consistently. Perhaps your goal to outperform the S&P could be accomplished by simply investing in ARK.

 

Take a look at Fundrise.....due your own diligence.