/biz/ - Business & Finance

[Anonymous No.745123]

How do you beat the S&P 500?

>pic unrelated

[Anonymous No.745139]

Leverage.

[Anonymous No.745147]

>>745123
Buy the market
Invest in funds indexed to the S&P and other.

[Anonymous No.745148]

>>745139
I did that.
Got a $8000 lending club loan at 4 percent and bought stock.

[Anonymous No.745172]

>>745148

that's not very responsible

[Anonymous No.745179]

>solar panel cleaner bot
but who cleans the solar panel of the solar panel cleaner bot

[Anonymous No.745180]

>>745148
You're doomed.

[Anonymous No.745183]

>>745148
retard alert

[Anonymous No.745186]

>>745148
>trading stock with debt
ever
pls be bait

[Anonymous No.745222]

>>745186
I don't see it is irresponsible. I'm not doomed and it isn't bait.

They gave me money to invest and I give them low monthly payments at a very low interest rate. What do you people think wall Street does? Only difference is they would get a lower interest rate.

[Anonymous No.745235]

By taking on more risk and by buying shares in smaller companies and low market/book value companies. See the Three factor model

[Anonymous No.745243]

>>745148
there are other ways of buying on a margin

[Anonymous No.745272]

>>745172
>>745180
>>745183
>>745243
>falling for this b8

You guys must be new

[Anonymous No.745276]

>>745123
Since the S&P is composed of companies that are already at the top of their game, they actually don't increase in value as much as the entire market (usually). So you could just buy an ETF or index fund representing the entire market.

[Anonymous No.745310]

>>745179

>but who cleans the solar panel of the solar panel cleaner bot

holy shit. mind fuckin blown

[Anonymous No.745408]

>>745235
>Three factor model

>2K15
>Using only three factors in your investing decisions.

Son, even stodgy-old Vanguard is ahead of you.

https://personal.vanguard.com/pdf/ISGFBI_042015_Online.pdf

[Anonymous No.745579]

>>745272
>implying I need to lie on the internet about my debt

[Anonymous No.745601]

>>745579

>implying you have to photoshop screen shots for validation on an anonymous image board

shiggy.

[Anonymous No.745613]

>>745148
>Hey gaiz, I just invested in a bunch of shit rate loans through lending club. There is now way this can go wrong; right?

>>745123
There are 3 ways to beat the S&P 500:
Selection
>select individual stocks with in sectors that will outperform their respective sector peers. Also known as "stock picking", this is probably the hardest to do.

Allocation
>Allocate more to outperforming S&P 500 sectors and less to underperforming

Global Macro
>Invest in any other market that will outperform the S&P. Anything from biotech, to small caps, international, some specific commodity, etc.

Leverage gets an honorable mention. Yes, you can outperform on an absolute basis. But you will never outperform on a risk adjusted basis by simply leveraging an index due to the cost of borrowing.

[Anonymous No.745615]

>>745179
well you only have to clean one panel by hand rather than the whole array


T. autism guy

[Anonymous No.745618]

>>745615

Actually that bot moves from panel to panel and at the end there is a little house that it ducks into that auto cleans the panel and refills the cleaning fluid reservoir. Oddly enough that little cleaning house runs off the electricity generated by all the solar panels... seems like they could have made the original bot work the same way...

[Anonymous No.745619]

find the worst performing stock in s&p, invest in every other one other than the worst performing one. not difficult

[Anonymous No.745624]

>>745619
>find the worst performing stock in s&p, invest in every other one other than the worst performing one. not difficult
Seriously? What part of "past performance is not an indicator of future returns" did you struggle with?

[Anonymous No.745627]

>>745624
"performing" is a present participle, meaning it indicates an ongoing verb. this implies it's not referring to "past" performance.

stay mad

[Anonymous No.745632]

>>745627
>"performing" is a present participle, meaning it indicates an ongoing verb. this implies it's not referring to "past" performance.

By adding "worst", this is past performance.

[Anonymous No.745633]

>>745123
>>745276
Vanguard VTSMX is exactly that; a bit of S&P 500 for stability and a bit of promising small companies for growth.

[Anonymous No.745638]

>>745632
verb tense is the defining metric, not any adverbs. you'll get it soon bro, stay cool

[Anonymous No.745645]

>>745632
BTFO grammar faggot
>also, stay poor

[Anonymous No.745651]

>>745638
Then you may be grametrically sound, but not logically sound. You can't define a performance comparison without past knowledge.

[Anonymous No.745659]

>>745651
real-time analysis. say 5 people are running to get away from the cops. if i'm watching in person, i can immediately see who is probably going to be tackled and tazed. that slow black fellow is the worst performing runner in this instance.

but i will not judge his perceived future performance based on his previous slowness. a guy ahead of him may trip over his baggy pants and then he will take over 4th place.

as you said, past performance isn't quite an indicator of future performance, but real-time analysis is perfectly fine, especially so if you can move capital fast.

[Anonymous No.745664]

>>745659
Cool story bro. Why aren't you rich?

[Anonymous No.745668]

>>745664
'cause i'm running from the cops. i thought i made that clear

[Anonymous No.745679]

>>745123
Mutual Funds or REIT's if you want some fixed income. Buying individual stocks is retarded unless you have either a shit load of cash or insider information. There are some exceptions to this rule but I doubt you have the money to but 100 shares of those stocks. If you want to gamble on your returns buy Netflix which is very volatile or go to a casino and put it on red.

[Anonymous No.745681]

>>745624
All in on National Bank of Greece then?

[Anonymous No.745704]

>>745123
>How do you beat the S&P 500?
Find share

Look at it over 5 years
is trending up more than trending down? If yes, continue
Look at it over 1 year
Can you see any noticeable patterns emerging? If yes, continue
Look at it over 1 month
Can you apply those patterns to the current price? If yes, buy intelligently, if not, continue.
Look at it over 1 day
Is the current price a bollinger band/self imposed unit below the expected price (found via pattern recognition)?
Is the price expected to continue to fall?

If yes to both of the last two questions, buy.

How much you buy can be personal, for instance it might be your thing to buy 500$ at a time. If you keep the entirety of your transactions under 10k, this can sometimes be cheaper in the long run because you two paying for trades.

Also, don't build a bot to do the above until you're VERY confident with your bot's algorithm. Pattern recognition is quite difficult.

[Anonymous No.746002]

>>745123
actually it is related. if you bought solar last year you'd smacked the s&p500's shit

[Anonymous No.746017]

>>745123
By conducting good wholesome stock market research, developing your critical thinking skills and making inferences based on fundamental and technical information, making sure you don't leap to conclusions or fall prey to any biases like the confirmation bias and accurately judging the relevance and accuracy of evidence and your theories, >>745704 is an example of (basic) technical analysis, it is valid evidence but he might be reading the tea leaves a bit, I treat it as evidence like any other alongside fundamental analysis and with a good measure of healthy skepticism

>>745704
Technical analysis is valid evidence but you might be reading the tea leaves a bit, I would treat this as evidence like any other alongside fundamental analysis and a good measure of healthy skepticism.

[Anonymous No.746074]

>>746017
>By conducting good wholesome stock market research, developing your critical thinking skills and making inferences based on fundamental and technical information, making sure you don't leap to conclusions or fall prey to any biases like the confirmation bias and accurately judging the relevance and accuracy of evidence and your theories, >>745704 is an example of (basic) technical analysis, it is valid evidence but he might be reading the tea leaves a bit, I treat it as evidence like any other alongside fundamental analysis and with a good measure of healthy skepticism
Or you could throw darts at a page of stock listings. Both are shown to be equally effective (actually, in tests, the darts outperformed the stock pickers over the long run).

[Anonymous No.746077]

>>745123

It is theoretically impossible to beat the market more than half of the time.

http://en.wikipedia.org/wiki/Efficient-market_hypothesis

Assuming you do not have insider information (which is illegal).

[Anonymous No.746104]

>>746077
The S&P 500 is not the fucking market, it's 500 American companies.

[Anonymous No.746109]

>>746077
>It is theoretically impossible to beat the market more than half of the time.
The real-world analysis is more interesting, I think. In the real world, the investor doesn't beat the market with just one pick; he's picking multiple stocks over a period of time. So its actually a series of coin flips, not just one.

So out of a hypothetical 10 coin flips, to beat the market you'd need 6 heads (5 to match, 6 to beat). And the odds aren't terrible: about 36%.

However, in the real world, there are transaction fees, commissions, and holding costs. So to truly beat the markets, you really need at least 7 heads out of 10 to make up for the transaction costs. Unfortunately, that knocks your odds down to 12%.

12%. A number which, interestingly enough, matches up quite nicely to the actual studies done of actual investors in the stock markets which say that 85-90% of investors, advisors and fund managers underperform. Let's not forget to actual studies of actual traders that say that 90% of day-traders underperform.

Its quite interesting how pure math probabilities line up so closely with observable experience. Its almost as if the Bogleheads really do know what they're talking about.

And it makes you wonder. If stock pickers are on the losing end of the odds AND on the losing end of experience, then why would anyone still do that?

[Anonymous No.746158]

>>745668

underrated post

[Anonymous No.746444]

Buy a small cap value index. Historically it outperform the market but with greater risk.

[Anonymous No.746453]

>>745123

OP don't bother listening to all these people saying it's theoretically impossible. Many of the top hedge funds consistently beat the market. The fact is that there are inefficiencies.

For example, in global macro many pricing inefficiencies are a result of central bank policy. A really popular trade has been shorting the yen and going long japanese equities cause of the countries supportive stance towards monetary policy. More recently in the past few months a big example was long dollar short euro.

These are broader examples but many examples apply to equities as well. Read hedge fund market wizards or any solid hedge fund book and you'll see tons of examples.

A couple good ones are Fooling Some of the People all of the Time, written by David Einhorn founder of Greenlight Capital, and When Genuis Failed, story about the rise and fall of Long Term Capital Management.

[Anonymous No.746464]

>>745681
do you even EMH? Expectations are already built into the price

[Anonymous No.746470]

and it is possible and there are inefficiencies.

the vast majority of investors are just not intelligent enough and are better off investing in an index fund. only a select few have what it takes

[Anonymous No.746479]

>>746453
>Many of the top hedge funds consistently beat the market.
[citation needed]
>The fact is that there are inefficiencies.
Not that are exploitable and in sufficient quantity to be more profitable than buy-and-hold.
>A really popular trade
Coin-flipping 101.
>Read hedge fund market wizards or any solid hedge fund book and you'll see tons of examples
Self-serving self-promotion by the very people hoping to separate you from your fee dollars. Don't be so gullible.
>Fooling Some of the People all of the Time
>When Genuis Failed
The irony is palpable.

[Anonymous No.746482]

>>746470
>the vast majority of investors are just not intelligent enough
Are the "vast majority" of professional fund managers also too stupid? How about the vast majority of hedge fund managers? The vast majority of Wall Street advisors?

Point me to one piece of evidence, one study, one scintilla of fact that correlates intelligence to performance in the markets. I'll be waiting.

[Anonymous No.746490]

>>746482

I don't necessarily mean 'intelligence'. Like Warren Buffet said, you only need an IQ of 120 or so to have the prerequisite intelligence to succeed.

It's a number of things. You need to have good judgement, attitude, experience, etc... Few people have this combination of skills

And lol, a 'Wall Street' advisor could be some idiot wealth management guy working at Charles Schwab. There are plenty of morons on Wall Street, even many so called hedge fund managers are idiots. Trust me, I've worked with them

[Anonymous No.746499]

>>746490
>You need to have good judgement, attitude, experience, etc... Few people have this combination of skills
My statement stands. Wall Street and Main Street are filled with highly-paid professionals with the best education, most extensive resources, and inexhaustible manpower ... and yet they can't beat the markets.

Stop perpetuating the myth that you can win the game "if only" you were better, stronger, smarter, or more disciplined. All it does is rationalize your failures, and keep you addicted to the Wall Street fee machine. You're literally chaining yourself to a failed system.

Ever see a sad, old, broken-down gambler pitifully feeding nickels to a slot machine knowing all the while that the big break is just around the corner if they stick with their system? That's you.

Time to wake up, anon.

[Anonymous No.746507]

https://www.preqin.com/docs/reports/Preqin-Top-Performing-Hedge-Funds-February-2015.pdf

http://en.wikipedia.org/wiki/Renaissance_Technologies
Happy?

[Anonymous No.746518]

>>746507
One and three-year performance figures? Am I being trolled?

Show me 5-year leaders. Then show me that those same leader can repeat in next 5-year period.

Our investment lives are 40-70 years long, anon. Any idiot can flip a coin and get three heads in row. Show me the guy that can get 7 out of 10 on a repeatable basis and then we're actually beating the markets.

[Anonymous No.746842]

>>745123
*** As long as you avoided the 3-4 years of tech bubble ***, buying the NASDAQ 100 at any time has outperformed the S&P 500 for the last 30 years. Given our technology-driven world, I see no reason this won't continue.

[Anonymous No.746843]

>>745123

*** As long as you avoided the 3-4 years of tech bubble ***, buying the NASDAQ 100 at any time has outperformed the S&P 500 for the last 30 years. Given our technology-driven world, I see no reason this won't continue.

[Anonymous No.746853]

You outperform the S&P by shorting it.

[Anonymous No.747636]

By buying Greek banks two weeks ago. Up 80% as of today.

[Anonymous No.747653]

>Buy cat
>Have him throw toy mouse at board of random stocks
>????
>Profit

theguardian.com/money/2013/jan/13/investments-stock-picking

[Anonymous No.747665]

By buying VTSAX, which holds about 4000 companies instead of just 500. Of course, this will still be correlated with the S&P 500.

[Anonymous No.747711]

>>747665
I gave up. No one can do it, so I just bought more voo. After the next exxon dividend I'm selling out my 111sh and buying more voo.

[Anonymous No.747921]

>>746482
>this infograph

Do people on this board fall for this shit

[Anonymous No.748063]

>>747921
>Do people on this board fall for this shit
Do you mean, "Do people on this board make their investment decisions based on facts, research, and proven economic realities?" If so, the answer is yes, some of them do.

Just because you believe the lies that Wall Street spoon-feeds down your fat gullet about superstar hedge fund managers making their wealthy client billions of profits doesn't make it true. There are successful hedge fund manager, true, just as there are success gamblers and lottery winners. The law of probabilities will always provides for that. But the vast majority of professional managers fail. And those who may succeed in one time period, fail in the next and the next and the next.

So the next time you want to dismiss decades of established research, economic study, and prudent financial planning as "shit" I suggest you reconsider the life choices that made you the contemptible person you are.

[Anonymous No.748124]

>>747921
the bait is strong with this one

[Anonymous No.748374]

>>745681

I'm only in BPIRY and EGFEY

They have been flying under the radar until recently. As of today I'm up 87% on BPIRY and down 8% on EGFEY after averaging down. Based David Einhorn was and I'm (somewhat) confident is still in both.

Too much attention on NBG. Shorts have been wrecking it for months and months. Don't feel good putting my money in it.

[Anonymous No.748486]

>>745633
>>745633
>Vanguard VTSMX is exactly that; a bit of S&P 500 for stability and a bit of promising small companies for growth.


>buying into vanguard hype

Graph VTSMX / VTSAX against the S&P 500. VTSAX is just a large cap fund wearing a dress.

[Anonymous No.748591]

>>745148
>loan
>for buying stocks
tell me im dreaming
no one is this retarded

[Anonymous No.748631]

>>748063
>geekwire
>nytimes blog
>years of economic research

If you invest with a hedge fund that acts like a mutual fund (e.g. going solely long or solely short with little variation), then sure, you can expect your little basket of stocks to have bad years. If your hedge fund is based on fundamental analysis, it WILL underperform. Period. The infograph ignores the differences in hedge funds other than fees and scale, and makes out index funds to be some sort of God-given blessing to investors. Acting like a hedge fund can't trade options and grouping in Fuccboi Capital with funds who can actually do technical analysis.

[Anonymous No.748633]

>>748591
I don't consider it foolish. It all went into exxon mobile, not penny stocks.

[Anonymous No.748637]

>>748633
>exxon mobile
>ever, ever making enough returns to justify any rate of interest

You might as well have just took a loan out and put it into a growth account

[Anonymous No.748651]

>>748631
>funds who can actually do technical analysis
>technical analysis
>technical analysis
Oh man, I admit that you got me. I actually thought you were being serious for a minute. Good one anon.

[Anonymous No.748670]

>>748651
Macroeconomic analysis of markets is right in the end, but getting there is a matter of time and ill-timed investments. Meanwhile anyone who can figure out the Elliott wave principle can see gains in the options market of 12% a year
Fundamental analysis is essentially running a regression analysis on stock prices and guessing what beta is. There's so many omitted variables and irrelevant regressors in people's studies of their stock/bond/fund/etc investments that it's mind boggling anyone would spend more than ten minutes on such an inefficient method

[Anonymous No.748675]

>>748670
>Elliott wave principle
Stop man, this isn't a YLYL thread! You're killing me anon.

[Anonymous No.748677]

>>748675
>his returns are single digits
>he thinks his knowledge of Paki oil reserves means his investment in Exxon wasn't a waste

[Anonymous No.748688]

>>748637
>You might as well have just took a loan out and put it into a growth account

Factor in xom dividends and it basically is a 2 percent loan. I expect oil to recover and the price of the stock to go up. If it doesn't, then it is still a cheap loan!

[Anonymous No.748701]

>>748677
dude, please stop embarrassing yourself.
Maybe you want to talk about dow theory next?

[Anonymous No.748705]

>>745148
ohshitniggawhatareyoudoing.jpg

LONG
IN
THIS
MARKET
?
WTF
T
F

[Anonymous No.748811]

>>748705
Do you have a better target?
Name the system!