Almost Nobody Beats the S&P Anymore – Not Harvard, Not Buffett, Not Even the Most Respected Hedge Funds in the World
And no one dares to mention it.
A notable exception in this global vow of silence is Mark Hulbert, one of the best writers at MarketWatch (article link below), who recently pointed out a very uncomfortable truth:
It’s hard to beat the S&P.
Even the best in the business don’t. Which makes you wonder why most people don’t just buy market index funds.
They should. They would do much better than paying fees to managers who are all show and no go.
This incredible lack of performance is something that Wall Street and almost all market commentators deliberately ignore. Instead, we constantly hear about someone’s great stock picks. But how are those stock picks doing compared to just sitting in an S&P index fund with much less risk and tremendous diversification?
Every time you see a stock-picker recommending stocks, you should ask how their stock picks have done compared to the S&P 500. They may have made a lot of money, but so has an S&P 500 index fund – usually more money, if not a LOT MORE money.
It’s not that stock picking is easy. It isn’t! It’s just that almost all stock pickers are absolutely terrible at their job!
Hardly anyone is willing to mention this because the problem is so widespread. If even just 25% of stock pickers were able to bear the S&P, it wouldn’t be so bad – people could and certainly would talk about. But almost no one beats the S&P and that’s why almost no one says a word about it. Almost everyone failing means almost no one talking.
So, it’s good to see an article, like the one below, calling out this secret hiding in plain sight. The best stock pickers in the world are bad at their job. Not that they don’t make a lot of money for their investors – they do. It’s just that none of that performance has anything to do with their skills. The rising stock market just pulled them along.
You would be far better off ignoring the stock pickers and just putting your money in a stock market index fund. And that’s not just good advice for the average investor, it’s good advice for almost any investor, including the richest investors in the world.