CAESARS' STOCK SOARS AS ELDORADO OFFER VALUES CASINO OPERATOR AT ABOUT $8.6B 
TRUMP DELAYS ICE RAIDS FOR TWO WEEKS SO CONGRESS CAN REACH DEAL 
FED'S STRESS TEST SHOWS NATION'S TOP BANKS COULD WITHSTAND $410 BLN OF LOSSES 
S&P 500 INDEX NOTCHES 2% WEEKLY GAIN, BUT ENDS FRIDAY SESSION IN THE RED 
THESE FACTORS COULD DRIVE GOLD ABOVE $1,400 OVER THE NEXT SIX TO 18 MONTHS 
BITCOIN PUNCHES ABOVE $10,000 ON CME, FOR HIGHEST TRADE INTRADAY IN A YEAR-PLUS 
'STRANGER THINGS' AND EVERYTHING COMING TO NETFLIX IN JULY 
DOW INDUSTRIALS CLIMB MORE THAN 100 POINTS, NOW ON TRACK TO END AT A RECORD 
DOW INDUSTRIALS WITHIN SPITTING DISTANCE OF OCT. 3 CLOSING RECORD 
FED'S KASHKARI SAYS HE PUSHED FOR HALF-POINT INTEREST-RATE CUT THIS WEEK 

"Beating The Street" In 500 Words

This is a Post from the Symbol Surfing Blog from Tue, Jan 2, 2018.


Beating The Street is a book by legendary investor Peter Lynch.

"As the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Lynch averaged a 29.2% annual return, consistently more than doubling the S&P 500 market index and making it the best performing mutual fund in the world."

https://en.wikipedia.org

In the 300+ pages, he talks about how he was able to achieve these amazing results.

https://www.amazon.com

If you want to learn about a really simple and low-risk way to beat the street, read on.

Your B.S. Meter should have broken just now.

First, you should be extremely skeptical if anyone claims they can beat the street.

Second, even if it was possible, it would not be simple and definitely not low risk.

I will provide proof.

Just continue reading.

First of all, what is "The Street"?

It's referring to Wall Street or the overall market.

The overall market is commonly referred to as the S&P 500.

"The Standard & Poor's 500, often abbreviated as the S&P 500, or just the S&P, is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ."

https://en.wikipedia.org

So beating the street simply means beating the performance of the S&P 500.

If the S&P 500 annual return was 7%, we want to get higher than 7%.

If theï S&P 500 annual return was -3%, we want to get higher than -3%.

So how can any investor start beating the street every year?

Invest in a S&P 500 ETF that pays a dividend.

The one I like is SPY.

Let's look at some numbers.

From January 7th, 2011 to December 31st, 2015, the SPX 5 Year Return was 65.5%.

https://ycharts.com

From January 7th, 2011 to December 31st, 2015, the SPY 5 Year Return was 64.9%.

http://performance.morningstar.com

Over the 5 year period, SPX and SPY had an almost identical stock price performance.

The SPX share price return, 65.5%, was actually more than the SPY share price return, 64.9%.

Actually, even though the share price rate of return of the SPY did not beat the market, the SPY actually did beat the SPX.

How?

The reason is that SPY pays a dividend.

Over the 5 year period, the SPY Annual Dividend Yield averaged over 2%.

https://www.spdrs.com

The SPX 5 Year Return was 65.5%.

Annual Dividend Yield: 0%

65.5% + 0% + 0% + 0% + 0% + 0% = 65.5%

The SPY 5 Year Return was 64.9%.

Annual Dividend Yield: 2%

64.9% + 2% + 2% + 2% + 2% + 2% = 74.9%

The annual dividend yield is the difference that beats the street.

What did Warren Buffett suggest to LeBron James?

"Just making monthly investments in a low-cost index fund makes a lot of sense." - Warren Buffett

http://www.marketwatch.com

That's it. No stock picking. One symbol that beats the street. In under 500 words.

Let me know in the comments section!

If you think your friends would like this post, please share it. Thanks!


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