Wait, High-Yield Beats the Market?

Feb. 17, 2025

Make no mistake, I got into high-yield for the money.

I didn’t get into because it’s new or cool or fun to talk about at parties.

I want to get paid.

For a long time, my hatred of losing kept growing. With every losing trade and every drawdown, I got more and more disinterested.

If my life is going to change, I need actual money in my grubby little hands. I don’t want to see a Peter Lynch paper profit in my account. I can’t pay my gas bill with a paper profit.

Oh, and that paper profit can sometimes disappear altogether.

And it turns out that paper profits from trading winning streaks can disappear, too.

I want lots of money going from my trading account into my bank account.

That’s real. That’s life-changing.

And I don’t care what the stock chart does.

A stock chart lies when it comes to high-yield. It only tells half of the story. It misleads people and scares them away.

But, when you trade high-yield ETFs, you can get a funny little by-product.

You can beat the market.

Yes, the one thing that everyone tells us we can’t do. The one thing that’s impossible for the regular person. The thing I’ve dedicated my Newsletter, YouTube channel, and life to.

No one can beat the market.

But high-yield can.

Wait, what?

Here’s some data.

Several months ago–after several months of research before that–I opened a tiny account and picked my favorite high-yield ETF. At that time it was CONY. Why was it my favorite? It had about a 100% yield.

I only care about the money.

And I wanted to see how it would do.

Well, here’s how the stock chart has done since I bought it:

Not great. Peter Lynch and Reddit would laugh me out of the building.

And here was my big strategy.

I bought CONY and let all cash distributions sit in my account. That’s it.

After a while, I noticed an interesting thing. I kept getting massive cash distributions into my account–just like the yield told me it would do.

The cash finally built up to a point where I had to put it to work. So, in February, I bought small amounts of MSTY, NVDY, and YMAX, and I used a little bit of margin (because margin is a great tool for high-yield investing).

There you have it. That’s my entire strategy and all members of that portfolio.

For fun, let’s ask an irrelevant question.

How has this silly little portfolio done when compared to the market?

Here’s the performance of that account since I started it:

Interesting. You can see the flat line on the left side of the picture; that was when I was researching and doing nothing. The actual trading starting in late September, and it’s returned over 20%. Whoa.

Now, (gulp), how does that compare to the market?

Here’s my portfolio v. the S&P 500. Keep in mind, the market had a several-month head start while I had opened the account and done nothing. My portfolio is in blue and the S&P 500 is in orange:

Crazy. My tiny high-yield portfolio wins. What about the Nasdaq?

Dead-even. Even though the QQQ had a multi-month head start.

And how about the small-cap Russell that all the experts say is the next big thing?

My portfolio killed the Russell.

Then, a few months ago, I opened a “Max Margin” account. In this account, I’m using as much margin as I can possibly stand. It has 6 ETFs in it and D.I.P. members get all the details on what’s inside. How has this margin-heavy portfolio done compared to the S&P 500?

It’s only been a few months but my Max Margin portfolio is outperforming the market by a good margin. How about Nasdaq?

It’s beating the struggling Nasdaq by even more. I won’t show the Russell because the Russell still stinks and my portfolio is beating it, too.

Again, I’m not doing this to try to beat the market. I’m a mercenary.

I only care about the money.

But, as it turns out, going for the money can also beat the market.

Who knew?

Talk to you soon.

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Disclaimer:
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.