I've been investing for 10 years now. I'm convinced it's not possible to beat the market. Can anybody out there do it over the long-run besides Warren Buffett? I can't afford a share of Berkshire, so I'm about to give up and just buy index funds.
2007-03-02 05:52:03 · 9 answers · asked by mukwonago53149 5 in Business & Finance ➔ Investing
Bill Miller of the Value Trust beat the S&P 15 years in a row before missing it in 2006.
2007-03-02 06:21:00 · answer #1 · answered by BosCFA 5 · 0⤊ 0⤋
I do. It is quite easy to beat the market in the long run, although when people ask how I do it, I ask them why they want to. Most people really just want to meet their goals and so do not try. On a purely statistical basis, I outperform the S&P 500 every day, using one year holding periods, for the last six and a half years when I began measuring. I tend to have a geometric average 20% per year regardless of economic circumstances, though I think my median was around 17%.
Read the "Intelligent Investor," by Benjamin Graham and "Security Analysis," also by Graham and the revised edition by Cottle. It will help alot.
Then, be willing to not invest in stocks. Always invest in the best value. A month before the NASDAQ peaked I bought a fixed rate annuity at 7 1/4% that will mature soon from a highly rated firm. That is well above the market since then. The rest of my portfolio went to cash. I wasn't timing the market, I was pricing the market. It was overpriced and I couldn't find any asset worth owning at that price in the equities markets. In retrospect I should not have chosen such a long lived asset as I have done much better, but I didn't know that then and may very well repeat the error in the future. The reason I may repeat the mistake is that the money had a specific purpose and that purpose is met and may not have been met in the market.
Second, remember that returns are concave in prices....a single overpricing mistake will on an overweighted basis, pull down your returns regardless of how good your other choices are. It isn't about being smart or good, it is about mistake minimization.
Third, never lose money. It isn't allowed. If you cannot be certain of your investments, in times of extreme stress both financial and in market stress, why do you hold it? Always presume you are going to make a mistake and then allow yourself a large margin of error in your estimating process. If you can still justify the investment despite the large error margin, then you should own it, otherwise, cd's and money market accounts are an excellent option.
I believe one b share is about 3500.
2007-03-02 06:07:11 · answer #2 · answered by OPM 7 · 1⤊ 2⤋
The key word is "consistantly." If you want a fund that beats the S&P each and every year, there was one, until 2006. Legg Mason Value Trust's manager Bill Miller has beaten it for 15 straight years until 2006. But if you are looking for a fund that has beaten the S&P 500 enough times to have a better long term record, there are lots of funds. Check Kiplinger's Personal Finance Magazine for February 2007, page 39. There is a chart showing the 20 largest no-load stock funds. "Of the 15 actively managed U.S. stock and balanced funds (on the chart), only THREE trailed the S&P 500 over the past 10 years.
2007-03-02 07:24:56 · answer #3 · answered by gosh137 6 · 0⤊ 0⤋
It's hard. Most mutual funds, managed by financial geniuses, don't beat the market. Only a (relative) few get lucky or have a special insight that helps them win. And, in most cases, these winners have down years where they underperform.
I'm with you. Invest in a market index fund or ETF. If you want to keep a portion of your money for playing around and trying to beat the market, go ahead. But don't make that the majority of your money.
2007-03-02 05:56:14 · answer #4 · answered by Jay 7 · 1⤊ 0⤋
Most people who consistently beat the market do so by doing a whole lot more than just buying shares of stocks and watching them go up or down. A few keys are:
1. A lot of analysis ahead of time, especially technical analysis for the short term.
2. Manage your risk
3. Use a strategy which includes an allotment for your losers, since you will hae some.
4. leverage
5. stick to your system
Good luck.
2007-03-02 06:05:36 · answer #5 · answered by Leo N 2 · 1⤊ 0⤋
Zacks.com is said to have been beating the market for long. Now though the returns have come down they still beat the market. There are lot of them who beats the market, but those who don't outnumber them so visibility is low of such entities.
2007-03-10 04:00:53 · answer #6 · answered by Mathew C 5 · 0⤊ 0⤋
jim simons of renaissance technology. his medallion fund as averaged 35% since 1989 (after fees of 5% management and 44% incentive). so, on gross his fund has averaged over 70%. take compounding into consideration, and the rate jumps to almost 100% per year. needless to say, he made $1.5B in 2005. public accounts of his net worth of $4B are likely underestimated since his company is completely private.
2007-03-02 10:11:57 · answer #7 · answered by jhshin2 1 · 0⤊ 0⤋
I do short term trading (few days to a few weeks) using technical analysis and I consistently beat the S&P 500 by a wide margin
2006 - 53.8%
2005 - 44.4%
2004 - 18.2%
2003 - 31.2%
2002 - 24.6%
Don't have the previous years handy.
2007-03-02 08:52:55 · answer #8 · answered by huskie 4 · 0⤊ 1⤋
Yes. Actually I know three persons:
Me, Myself & I.
2007-03-02 17:22:00 · answer #9 · answered by Anonymous · 0⤊ 3⤋