Beating Index SP500

[Enuff2Eat]

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

 

[aja8888]

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

I have to believe that's where you are with that request.

 

[NW-Bound]

It's not hard to beat the S&P in 1 year. Or 2 years, maybe even 3.

If a guy can beat the S&P consistently, he's too busy making money for himself, you cannot hire him.

 

[Enuff2Eat]

It's not hard to beat the S&P in 1 year. Or 2 years, maybe even 3.

If a guy can beat the S&P consistently, he's too busy making money for himself, you cannot hire him.

lol ... so true

 

[RunningBum]

I'm sure you can easily find advisors who beat the S&P the last 3 years. Most likely they did it by taking more risks, which usually do well in bull markets. And they usually do poorly in bear markets. 3 years of good history is no guarantee of future success. I think you're setting a foolish standard that may get you in trouble.

The S&P did 28%, 18% and 31% over the last 3 years, with low inflation, at least until last year. Just how much better returns do you need?

I took too many risks in the dotcom bubble, mostly just riding out what had been working. Delayed my retirement by 10 years.

 

[38Chevy454]

It's easier to do in a growth environment like we had past few years. Take some risk on growth stocks and if it pays off you beat the S&P500. That risk can also result in less than S&P500. However to beat S&P500 in other than growth environments is harder IMHO. No matter what to beat S&P500 you have to take on more risk. As that old saying goes, higher risk for potentially higher returns.
I do have a small portion of my savings where I try to beat the S&P500; investing in individual company stocks. It is ultimately a market timing move mostly trying to pick those that are going up more than the overall market. I was doing real good last year until near the end of the year when they dropped more than the market overall. So last year I did not beat the S&P500, but it gives me something to do outside my majority boring index type funds that do the major load carrying in my nestegg.

 

[Luvtoride]

Running, well put. Sorry to hear about your experience but I think it’s the best caution to the OP about his goal.

As I’ve been reading many members posts here in the “2021 Performance” thread, I’m not sure that any of them “beat” the S&P 500 last year but uniformly everyone seemed very pleased with their results and their portfolios being larger than at the start of the year!

 

[Dtail]

You kind of know what the answer is already. There are always exceptions to the rule.
As mentioned, ask any advisor to prove to you how they beat the S&P in down markets.

 

[sengsational]

Beating the S&P in the past three years means very, very little to me. Now, if the last 3 years had included a significant and long bear, and somebody beat it, that would be more interesting, although, still, given the total quantity of prescribed portfolios, many of those were simply lucky and the luck probably won't last.

 

[RunningBum]

Running, well put. Sorry to hear about your experience but I think it’s the best caution to the OP about his goal.

I only got to that point by taking risks that paid off really well before the bubble burst. A good part of it was unavoidable risk by getting employee stock options with one of the hottest companies in that run, which I couldn't exercise immediately. I should have pulled my chips from the table when I got rich enough, but at least I learned some lessons. And if I had cashed out and quit, but stayed invested mostly in dotcoms, I could have been without a job and not FI. So I don't feel sorry for myself. And I was still able to ER before age 50 and it's been a worry-free retirement.

 

[mickj]

I did it , it was mostly luck.

 

[Aerides]

My play account in Etrade has beaten the S&P. It says I'm up 91.02% vs. 81.8% for the past 3 years.

But that's just it - it's my play account. My risky bets, mostly with which I've been lucky. Small change stuff in terms of dollars I put in. And YTD I'm lagging a couple of points, so I was doing better at the two year mark!

 

[MRG]

I have with my Roth. Google 95% 5% Tesla. I wouldn't do that with the bulk of my retirement.

 

[OldShooter]

My play account in Etrade has beaten the S&P. It says I'm up 91.02% vs. 81.8% for the past 3 years.

https://ycharts.com/indicators/sp_500_total_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?

 

[NW-Bound]

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.

 

[corn18]

I'm ok with exactly meeting the S&P500 because that beats over 80% of professional, highly compensated fund managers whose job is to beat the S&P500. And paying someone 1% to do worse than I can makes no sense whatsoever. Why pay someone to suck?

 

[jollystomper]

From what I compared using Portfolio Visualizer, one of my few managed funds, Fidelity Growth company (FDGRX) has been well above my Vanguard Index 500 S&P fund (VFIAX) for the last 3 calendar years (2019-2021). $10,000 at the start of 2019 would be 28,000 today in FDGRX vs 20,000 in VFIAX.

FDGRX has also beaten VFIAX in returns for 13 of the last 20 years.

But, I am fine with my VFIAX holdings being 5 times my FDGRX holdings. I am fine with those levels of investments for the comparative risk in up and down markets.

And, as always, past performance does not predict future results...

 

[mrfeh]

Please recommend me an agency that can have deliever such promise.

Nobody can make that promise.

And if they do, they're lying.

 

[chassis]

Gentle reminder to use total return for the analysis. SP500 on a price basis is not the proper comparator, SP500TR is. One's own personal return should be evaluated inclusive of dividends and capital gains.

 

[Aerides]

https://ycharts.com/indicators/sp_500_total_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 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.

 

[RobbieB]

That'll teach you about beating the index funds -

 

[NW-Bound]

https://ycharts.com/indicators/sp_500_total_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.

 

[Badger]

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!

 

[SecondCor521]

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.

 

[NW-Bound]

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.