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Old 01-12-2022, 09:34 PM   #21
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That'll teach you about beating the index funds -
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Old 01-12-2022, 10:21 PM   #22
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Originally Posted by OldShooter View Post
https://ycharts.com/indicators/sp_50..._return_annual says S&P was up:

31-Dec-21 28.71%
31-Dec-20 18.40%
31-Dec-19 31.49%

Compounded that’s almost exactly 100%. Is that what your 91.02% compares to? Possibly you didn’t consider the dividends that the Dow paid during the 3 years?

I had to look. That was right!

If you invested $10K in the following 3 index funds on 12/31/2018, this is what you got on 12/31/2021:

SPY: $19,998
VFINX: $19,960
VOO: $20,010

And of course, being an active investor and a stock picker, I had to look at my own stash. Using Moneychimp's formula to adjust for withdrawal, I computed a gain of 90.9% for the last 3 years.

I am quite happy with that, because the gain is computed over all accounts, not just my active trading accounts which are about 2/3 of my investable assets. The remaining 1/3 includes a lot of lower-gain accounts, such as I bonds and stable value fund. If I counted only the active accounts, then I beat the index. But of course, only the return on the total amount counts.

More importantly though, the active accounts as well as the total portfolio are never 100% in stock. My stock AA runs 60% to 80%, depending on market condition.

It takes a lot of option selling to generate additional gains to get that 90.9%. And it takes a lot, because I hold none of the FANG stocks that did so well in the last few years. The reason I don't hold any of these stocks is that I am at heart a contrarian and don't want to follow the crowd. I buy a lot of stocks that don't appear in headlines in Web pages anywhere.

PS. Short-term options on individual stocks do not have very high volumes. I can do what I do because my style of investing only works for small investors with a few mils, not for a mutual fund or a large portfolio.
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Old 01-13-2022, 07:27 AM   #23
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Anyone here actually beat SP500 return in the last 3 years? .. If so if you don't mind sharing your knowledge and choices of holding..

I am happy to pay a Financial Advisor or an Agency such as Edward Jones, Vanguard, or Fidelity if they can prove that the last 3 years they managed portfolios that actually beat the SP500.

My experience talking to these people folks are about "balance and diversify", invest not to lose... after said and done, it seems like they were suggesting us to similar index like SP500 + some less risky bonds and want 1% fee.

I have 100% of my investment in SP500 for now. I hope to retire in 2,3 years. Kids are finishing up college.

Please recommend me an agency that can have deliever such promise. Maybe I live in the fantasy land.

Enuff
You could benefit from reading a few resources that are often recommended in this forum and then consider how much you are willing to risk. I would be wary of anyone who would claim to be able to deliver what you want. I have always appreciated the knowledge of a few of the members here but rarely accept recommendations for particular stocks. No investment firms will set up an investment program for free and you may even find that if they do beat the SP500 their fees may eat up any additional returns. If they buy and sell stocks frequently then you may even wind up with less than the SP500 after the bill comes in.


By the way, have you read posts on here about investing through Edward Jones?


Cheers!
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Old 01-13-2022, 09:16 AM   #24
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Remember to adjust for risk.

There are plenty of investments that beat the S&P over the past 3 years. TSLA probably did, for example. But TSLA is riskier than the S&P.

Remember to adjust for taxes.

In a taxable account, selling S&P and buying something else (someone like the OP who is giving up on the boring S&P to go with an advisor-recommended strategy) probably means you'll pay a fair chunk of capital gains taxes. Money that will not compound for you.

The income thrown off by non-S&P stuff could be higher than the S&P dividends, resulting in higher taxes.

Dividends resulting from a trading strategy by an active manager are less likely to be qualified dividends, resulting in higher taxes.

More trading in a taxable account means more capital gains taxes.

Remember to account for costs.

Active management sometimes has load fees. It almost always comes with higher expense ratios. If trading stocks, you may have transaction fees.

Keeping track of all the trading means more time, which is a form of a cost.

Filing one's taxes can get more complicated, and may result in requiring a professional tax preparer, which adds to costs.

Remember that what is in favor rotates out of favor. An investment that beat the S&P500 over the past three years probably did so because it was overweight something that did well, such as TSLA. What will outperform over the next three years might be TSLA but will probably be something else.

And constantly shifting investing horses to chase those winners usually doesn't work, because people shift to them just about when they stop working, and shifting investments results in all of the taxes and costs of active management listed above.

...

I have yet to see, even on this board, someone who has beaten the S&P (a) over a longer period of time (let's say 5 years), (b) on a risk-adjusted basis, (c) after accounting for taxes, fees, and costs. Most people (often including myself) can't even accurately determine their investing rate of return over even a shorter period of time, much less do the more advanced accounting of risk-adjustment and after-tax calculations. In my case, Quicken, Vanguard, and Yahoo! Finance are all approximately the same but don't exactly match. I've honestly never bothered to track down why; maybe I should some day.
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Old 01-13-2022, 10:07 AM   #25
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Remember that what is in favor rotates out of favor. An investment that beat the S&P500 over the past three years probably did so because it was overweight something that did well, such as TSLA. What will outperform over the next three years might be TSLA but will probably be something else.

And constantly shifting investing horses to chase those winners usually doesn't work, because people shift to them just about when they stop working, and shifting investments results in all of the taxes and costs of active management listed above.
Conquering FOMO is hard, but this tendency must be resisted.

Regarding taxes, I do active investing in my retirement accounts. The burden of filing gains/losses for the IRS would drive me insane. And all money from the accounts will be taxed as regular income anyway. This frees me to pursue whatever action that I think is gainful.
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Old 01-13-2022, 10:17 AM   #26
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Originally Posted by Enuff2Eat View Post
Anyone here actually beat SP500 return in the last 3 years? .. If so if you don't mind sharing your knowledge and choices of holding..

I am happy to pay a Financial Advisor or an Agency such as Edward Jones, Vanguard, or Fidelity if they can prove that the last 3 years they managed portfolios that actually beat the SP500.

My experience talking to these people folks are about "balance and diversify", invest not to lose... after said and done, it seems like they were suggesting us to similar index like SP500 + some less risky bonds and want 1% fee.

I have 100% of my investment in SP500 for now. I hope to retire in 2,3 years. Kids are finishing up college.

Please recommend me an agency that can have deliever such promise. Maybe I live in the fantasy land.

Enuff

May I ask why you feel you need to beat the S&P500 in order to meet your financial needs?
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Old 01-13-2022, 10:20 AM   #27
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I have been an active investor since the late 90s. The 2000 dotcom mania taught me a few lessons.

One is that nobody can beat the market every single year. You can't when the market goes crazy on a bubble mania. To beat the market, you would have to be crazier, by buying on margin!

Secondly, it takes some discipline to fight FOMO. And playing contrarian is tough when other people make money hand over fist, and you are in your corner holding the shares that people shun.
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Old 01-13-2022, 01:48 PM   #28
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My experience talking to these people folks are about "balance and diversify", invest not to lose... after said and done, it seems like they were suggesting us to similar index like SP500 + some less risky bonds and want 1% fee.
I have a buddy who insisted to put 20-30% into individual Municipal Bonds. So he found advisor who for 1% did just that.

How much is now my buddy making? Assuming generous 3% yield and 7% inflation he is making -4% and paying 1% fee for for a privilege.
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Old 01-13-2022, 02:18 PM   #29
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Sounds about right. Also why I have an 80-20 AA. The munis are just my rock in case something bad happens with equities.
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Old 01-13-2022, 02:36 PM   #30
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Originally Posted by Enuff2Eat View Post
Anyone here actually beat SP500 return in the last 3 years? .. If so if you don't mind sharing your knowledge and choices of holding..

I am happy to pay a Financial Advisor or an Agency such as Edward Jones, Vanguard, or Fidelity if they can prove that the last 3 years they managed portfolios that actually beat the SP500.

My experience talking to these people folks are about "balance and diversify", invest not to lose... after said and done, it seems like they were suggesting us to similar index like SP500 + some less risky bonds and want 1% fee.

I have 100% of my investment in SP500 for now. I hope to retire in 2,3 years. Kids are finishing up college.

Please recommend me an agency that can have deliever such promise. Maybe I live in the fantasy land.

Enuff
I've had some decent luck beating the S&P. Unfortunately I came up just short this past year. I do it with 20% AAPL, 50% MGK, and the other 30% split between VOT and VBK. That' is how I was very, very close to beating it last year, and have beat it in the past with that mix.
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Old 01-13-2022, 04:47 PM   #31
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My entire portfolio is up 0.80% today, against the S&P at 0.28%, Dow at 0.11%, and Nasdaq at 0.23%.

I am only 70% in stock, and diversified with 115 stocks, plus some MFs. But my concentration sectors happen to do well today. Metal and mining are up, such as X, FCX, STLD, BHP, MOS, etc... Also semiconductors, such as AMAT, TSM, LRCX, KLAC, etc...

The losers today include biotech, pharma, agriculture, energy. It just happens that my hot sectors outwin my losing sectors today.

What will happen tomorrow? I dunno.

I am down -0.80% today, beating the S&P at -1.42%, the Nasdaq at -2.51%. The Dow is the winner at -0.49%.

Hey, I beat the market two days in a row, this time by losing less.

Some of my stocks manage to go up on this bad day, such as Sysco, Conagra, Tyson, Louisiana Pacific, etc...

What will happen tomorrow? Maybe I will lose more than the market for a change.
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Old 01-14-2022, 08:58 AM   #32
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May I ask why you feel you need to beat the S&P500 in order to meet your financial needs?
^ This . . . This is a very good question.
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Old 01-14-2022, 09:13 AM   #33
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May I ask why you feel you need to beat the S&P500 in order to meet your financial needs?
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^ This . . . This is a very good question.
Don't let bias change the question. NEED wasn't mentioned.

'I am happy to pay a Financial Advisor or an Agency such as Edward Jones, Vanguard, or Fidelity if they can prove that the last 3 years they managed portfolios that actually beat the SP500'

I'm happy with the index myself, but was hoping we'd get to know outliers. Maybe they are over on reddit.
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Old 01-14-2022, 09:16 AM   #34
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Don't let bias change the question. NEED wasn't mentioned.

'I am happy to pay a Financial Advisor or an Agency such as Edward Jones, Vanguard, or Fidelity if they can prove that the last 3 years they managed portfolios that actually beat the SP500'

I'm happy with the index myself, but was hoping we'd get to know outliers. Maybe they are over on reddit.
My friends hired a guy that beat the crap out of the S&P500 the first two years. And last year he lost money. But they are still up way more than the S&P500. I can post the list of stocks he bought if you are interested. But I would not go with him. He got his butt kicked last year and I want to see how he recovers after a downturn.
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Old 01-14-2022, 12:03 PM   #35
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I am literally just reading off what etrade said. I don't think I have much in the way of dividends in these, but that's really not the point. Also, I'm not trying to pretend I can and/or should try to do better on my own, or that I would do more than run away from any FA who tried to make me any promises about beating the markets (lol). Initial investment here is less than 10k, 5 stocks. Just a play account.

I just thought it was a fun way to answer the OP and raised my hand. Jeesh.
Sorry, no intent to annoy. What I wanted to highlight was that "beat the S&P 500" must be interpreted to beat the total return. This tends to get deliberately ignored by the hucksters.
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Old 01-14-2022, 12:18 PM   #36
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May I ask why you feel you need to beat the S&P500 in order to meet your financial needs?
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^ This . . . This is a very good question.
With respect, I think you are not getting the concept of a benchmark. It really has nothing to do with what an investors financial needs might be.

Other common benchmarks include the height/weight charts for children. Parents and pediatricians use these to assess a child's development compared to its peers. Using an investment benchmark is the same thing, but IMO arguably more important, because of the many ways a portfolio is routinely battered and bashed by events and by active management.

Personally, I don't like the S&P because it is a sector benchmark -- limited to large-cap US funds. I like the All Country World Index; basically all the stocks in the world. I also have a personal benchmark that I started on 1/1/2015 with $65K in a total US index fund and $35K in a total international index fund. Total couch potato; all dividends and interest reinvested and just watch the numbers roll. By watching benchmarks I can see sector ebbs and flows as well as active management fails.

So, I'll defend the OP. The S&P may not be the best benchmark but it is pretty good. The OP's optimism is understandable too, though those hopes will be dashed. We have all been there. In my adult-ed investing class we talk about the two fundamental myths of the hucksters:
Myth 1: There are people with investment skills that enable them to consistently beat the stock market’s average performance.

Myth 2: It is possible to identify such people in advance and it is possible for retail investors to hire them.
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Old 01-14-2022, 12:45 PM   #37
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Consistently beating the markets is hard to do. To put the OPs request into context...some of Wall Street's greats legends have it that they would "beat the market for 7 years" and then retire.

My guess is because they know beating the market for 10, 15 or even longer is likely near impossible. Sure there might be a unicorn situation but to consistently beat the markets year after year, just isn't reality for 99.5% of investors.
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Old 01-14-2022, 02:36 PM   #38
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Maybe its me, but with a 15%+ average over 10 years, why even try?

Monty Hall says: "you can have 15% doing nothing or, behind door #2 you can do a lot of work and maybe do better or maybe get zonked!"

"Take the money and run" has been a motto that has served me well my whole life.
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Old 01-14-2022, 05:36 PM   #39
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My friends hired a guy that beat the crap out of the S&P500 the first two years. And last year he lost money. But they are still up way more than the S&P500. I can post the list of stocks he bought if you are interested. But I would not go with him. He got his butt kicked last year and I want to see how he recovers after a downturn.
Sounds like Motley Fool Stock Advisors. Good '20, bad '21.

I'm not looking for a hired picker. I have no problem with those who try and even root for them. Arguably, I do so with a portion of my AA. I hang out on this forum to restrain my desire to play with individual stocks. Please post his horses for '22 if you find out what they are. It is fun to watch.
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Old 01-15-2022, 08:47 AM   #40
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no hope

thanks all for your suggestions and comments...

so paying fee + taxes consequence alone is not worth it. Beating SP500 is a pipe dream. Even I am lucky to pick the right stock like Tesla in the last 3 years, nobody is foolish enough to put their entire portfolio into 1 or 2 stocks.

These advisors always come with print out view graphs and charts that seems so attractive. Also with an incredible convince sale pitch that make me want to sign the dotted line...

With that being said, I am boring and accept my boringness.. for now, just stick to SP500 index even it looks bad lately.

Enuff
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