I keep hearing on some threads that it’s impossible to beat the indexes long term. And it’s stated as if it’s an established fact, and that “Everyone knows that!”.
I started keeping track of my portfolio results in 1989, when my wife found herself pregnant with our daughter, and I had plans to retire in 1996 (panic!) On Jan 1st 1989, the S&P was at 285.4. Last night it was at 2373.5, which represented an 8.3 bagger in 28 years. Not bad (I guess).
Now let’s look at how my results compared during that time. Well I’ve made a 352.2 bagger on my entire portfolio since that time (Not up 352%, but a 352 bagger(!), up thirty-five thousand one hundred twenty percent). Now an 8 bagger versus a 353 bagger seems to me to be beating the market. Long term!
Some will complain that I didn’t add in the dividends of the S&P stocks. Okay, double that return to a 16 bagger, or triple it to a 25 bagger. It doesn’t change anything. And I’m not sure exactly what day in 1989 I started keeping track. Maybe it made a difference. Knock my results down to a 300 bagger, to allow for errors. What the heck…I don’t care. Any way you look at it a dedicated investor can beat the indexes. Long term!
How about this year? Let’s see: I was up 20.2% at yesterday’s close. The S&P was up 6.0%. The Russell 2000 small cap index was up 2.0%. The IJS small cap value index was DOWN 0.7%. (Those indexes average up 2.4%).
How can I be up 20.2% when the Indexes are up an average of 2.4%? Well there’s no magic to it. I tell you what I’m doing each month. There’s no slight of hand. There’s as much transparency as you’ll ever see…not “xxx owns shares of ABC” but percentages of my portfolio and often if I’ve added or subtracted (and why). Yes, you can beat the indexes.
Let’s all continue to have a successful and profitable year!