17 Jan More Obvious Ways to Beat the Market
More Obvious Ways to Beat the Market
Jan. 17, 2024
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I could listen to Warren Buffett and Charlie Munger talk for hours.
And I have.
They throw out life-changing ideas as easily as brushing their teeth.
But there’s one thing that I’ll never understand.
And that’s their warnings that regular people can’t beat the market.
I understand why everyone doesn’t turn pro in tennis. It’s hard physically, mentally, and financially.
But beating the market and 94% of mutual funds and nearly 100% of hedge funds takes no effort whatsoever.
All it takes it the ability to type three different letters.
If you were able to type QQQ into your broker’s platform instead of SPY, and then go on vacation for 20 years, here’s what would’ve happened between 2004-2024:
As we learned in the last Newsletter, QQQ makes more than twice as much as an index fund. That’s how easy beating the market is.
But that’s not all.
What if we typed SMH on our keyboards instead? Here’s how the semiconductor ETF did from ’04-’24:
In that case, we almost tripled the return of the market. All we’d have to do is think that computers were going to exist in the future and we would have beaten the market by a vast margin.
But wait, there’s more.
That’s just not fair. That would’ve taken one more keyboard stroke.
How about the boring Moody’s rating agency?
How about a REIT? Here’s Realty Income (O):
You get a monthly dividend check and you beat the market.
How about McDonald’s?
If you like Big Macs, you could beat the market by threefold.
Is beating the market hard? I picked these examples off the top of my head. I didn’t do even one Google search.
I don’t think buy-and-hold is the best way to go in most cases, but if you do want to trade like that, you can beat the market handily using many different options just by choosing something different than the hype.
In our next Newsletter, we’ll see if a simple system does as well.
Talk to you soon.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.