At the Market Outperformer, we believe that an individual investor can consistently achieve above average market returns by adhering to a simple but disciplined investment strategy. Our newsletter is dedicated to helping our subscribers realize investment returns that exceed those of both the general market and most fund managers. How is this possible? Let's review your investment alternatives.
Buy and Hold Has Failed You
One popular investment strategy is to buy and hold an index fund that represents the broad stock market, such as the S&P 500 index. This seems like a reasonable approach that, by definition, keeps you from underperforming the general market. Let's evaluate its results. If you bought a fund which tracks the S&P 500 index at the beginning of 2000, by the end of the decade you would have lost 24.1% of your money. That's right. The index began the decade at 1,469.25, and ended it at 1,115.10. You can see a snapshot of the entire decade at bigcharts.com, or scroll down to the chart below. And for further analysis, see Standard & Poor's special report Bidding Farewell to a Dismal Decade.
Even worse, that 24.1% loss is in nominal terms. After factoring in both dividends and the cost of inflation, you actually would have lost 29.2% of your money in real terms. With such a large loss, your portfolio would need to grow by over 41% just to break even. Clearly, a passive strategy of buying and holding an index fund did not work well for most investors over the last decade.
Giving Your Money to a Fund Manager is Even Worse
Alternatively, you could give your money to someone else to manage for you, like your stock broker, a mutual fund manager, or a hedge fund manager. The problem with this approach is that these “experts” probably performed worse than the market average. According the John C. Bogle, founder of Vanguard Investments, over 80% of mutual fund managers fail to beat the benchmark S&P 500 index. For more information, read the classic Business Week article Can Anybody Out There Beat the S&P 500?, or Mark Hulbert's review of the academic studies on the subject, or get a copy of Jack Bogel's The Little Book of Common Sense Investing.
Such below average results are understandable, given that these funds must incur transaction costs to buy and sell stocks that the index itself naturally avoids. And these funds must pay huge salaries and bonuses to their fund managers. Both of those expenses come right out of your pocket. The net result is, if you had someone else manage your money for you, there is an 80% probability that he or she would have lost even more than 24% of your money in the last 10 years. In hindsight, neither of these two alternatives would have been a good investment for your retirement nest egg over the last decade.
Following the Market Trend: A Proven Long Term Investment Strategy
We invite you to consider the Market Outperformer approach. Our investment philosophy is simple. We let the market tell us when and where to invest. We use long term moving averages to tell us when to invest. And we use market returns to tell where to invest, buying only those funds that are outperforming 90% of the funds in our list of potential investment candidates.
When the stock market is in a confirmed uptrend, we are fully invested in a diversified portfolio of the best performing equities, and we hold them for as long as they continue to outperform the market, or until the market is no longer in an uptrend. Conversely, when the stock market is in a trading range, or in a downtrend, we are positioned in cash or bonds.
As you might expect, such a trend following approach lags the market, so it never gets us into the market at the exact bottom, or gets us out at the exact market top. But using this approach, we are always invested in the best performing stocks during the bulk of every bull market, and we are always in the relative safety of cash or bonds during the bulk of every downturn. This approach has a proven track record, giving us 4 very clear signals over the last decade, as indicated by the 12 month moving average in the chart below:
ETF's Create a Balanced Investment Strategy
We use exchange traded funds (ETF's) as our investment tool of choice. Why? First because they offer far greater diversification than individual stocks. Second, their expenses ratios are much lower than mutual funds which often come with large loads and high management fees. Third, ETF's are generally more tax efficient than their mutual fund counterparts because they have a much lower turnover ratio. And finally, they help us reduce risk. With just a handful of the best ETF's (our portfolio usually holds less than 10), we are able to hold positions in hundreds of companies, across multiple sectors, geographies, and market capitalization levels, while at the same time reducing our exposure to single company risk and earnings surprises.
A Plan Suited for your IRA or 401k Investment Portfolio Strategy
Every buy recommendation we make must be outperforming 90% of the funds in our investment candidate list, so you know you are always buying the best performing funds. And every recommendation also comes to you with a clearly defined and unemotional exit point, so your profits are always protected and you are never exposed to a catastrophic loss. This is not a “get rich quick” scheme, but a conservative investment strategy that consistently outperforms both the general market and most institutional investors. This low risk, high return strategy is well suited for use in an IRA account or a 401k account. And we are so sure of your success that we guarantee our recommendations will beat the market or your subscription is free.
So Easy to Implement, You Can Do it in just 10 Minutes a Month
Even though our investment methodology utilizes some very sophisticated analyses behind the scenes, we make it very simple for you to implement. Each month, on page 2 of our newsletter we tell you exactly what, when, and how much to buy or sell. If you take just take 10 minutes each month to follow the very clear buy and sell recommendations for our model portfolio, you will have a low risk, well diversified portfolio that beats the market. To see how easy it is, just download a free sample newsletter, and review the "New Recommendations" instructions on page 2 of the newsletter.
If you want to dig deeper, and understand more about our methodology, you can read about our well defined and disciplined investment strategy and use these principles to build a unique investment portfolio of your own, based on our Market Outperformer 100 list, but this is certainly not required to get started.
Last year, our model portfolio returned 37.4%, beating the S&P total return by 11%. If you'd like to become a market outperformer yourself, subscribe now.
