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What Beat the S&P 500 Over the Past Three Decades? Doing Nothing

Funny, given the other thread on indexing: https://morningstar.com/articles/1150002/the-portfolio-that-beat-the-sp-500-over-the-past-three-decades If only we were a little lazier and could leave things well enough alone.

Comments

  • I saw that article. Worth noting is that the method of reinvesting divs was different from what funds do. He reinvesting divs into the stocks generating those divs (computing total returns for each holding), while a fund or index (I presume) reinvests divs regardless of their source by prorating across all holdings.

    For buy and hold (and for beating the S&P 500 over the past three decades), see LEXCX.
  • The Fund is currently invested in a total of 22 leading U.S. corporations. The Fund is a passively managed grantor trust registered with the SEC as a unit investment trust.

    https://www.marketwatch.com/investing/fund/lexcx

    a third of of the links in the popup are dead:(

    but this of course is the most informative, also pretty funny

    https://www.mutualfundobserver.com/discuss/index.php?p=/search&Search=LEXCX
  • edited April 2023
    There’s a whole industry dedicated to helping us milk the stock monkey. I mean hedge funds, financial advisors, robo advisors, on line gurus like Zacks, The Motely Fool, Seeking Alpha and all the assorted publications. Then there’s the active fund houses like TROW with hundreds of different funds focused on every conceivable financial crack and crevice. It seems an entire industry might die if everyone bought into this idea and started ignoring their investments, Might bring on the long awaited recession (thereby causing those investments to decline).

    Does it work? I believe it. My best singe day & week in at least a year occurred while traveling in the UK last November. No cellphone connectivity for a week. Not willing to risk trading over hotel wi-fi, just ignored everything. I can testify the hands-off strategy definitely works.:)

  • edited April 2023
    Rebalancing our portfolio once a quarter is not too unreasonable. Except that is boring and we know how when behavioral investing is involved everything goes, including myself.
  • edited April 2023
    I once read an interesting quote about rebalancing, I forget from who. Basically it said rebalancing can be like digging out your flowers and watering the weeds.

  • For my kids 529 funds, I rebalance them every 3 years to reduce stock allocation. A year or two before tuition bills are due they were moved to money market funds. Rules on 529 funds are highly restrictive; used to be ONE change per year and now is TWICE.

    Our other accounts are more actively managed, especially in the last decade.
  • @davidrmoran

    One of the great things about MFO discussions is searching for all the old articles.

    Click on your link and who pops up?

    Good ol' Ted!

    I do miss his multiple daily links.

    Maybe David can ensure that once we each contribute a certain number of posts there will be a way to contact our heirs after we pass, ie don't post for what a week or a month? ( hopefully just after posting a brilliant can't loose investment idea with no risk for everyone) and allow the surviving MFO members to remember us the way we did Ted.
  • edited April 2023
    MikeM said:

    I once read an interesting quote about rebalancing, I forget from who. Basically it said rebalancing can be like digging out your flowers and watering the weeds.

    Sounds like Buffett was quoting Peter Lynch.

    To rebalance or not rebalance? That is the question …

    I’d say it depends on age, purpose, resources and what you’re trying to accomplish.

    Related thought - Do folks give any thought as to why they select each holding for inclusion in their portfolios in the first place? Surely, they did their homework, gave it a lot of thought, and had confidence in each holding’s long term potential. If it merited inclusion at a specified weighting then, why change your mind because it hasn’t “grown” as much as the other investments? Not everything moves in the same direction all of the time.

    Is cash a “weed”? Likely over time your equity holdings will outdistance your cash / fixed income holdings. That’s how it’s supposed to work. Following Lynch’s thinking would mean not trimming profits and rebalancing into cash. Buffet talks a good line. I don’t know of anyone who has enunciated so much thought in so few words time and time again as he - except perhaps for Benjamin Franklin. Neither, I suspect, has always hewed 100% to their stated dictum.
  • edited April 2023
    John Rekenthaler wrote a follow-up column for Jeff Ptak's original article.
    Voya Corporate Leaders Trust was mentioned and compared to Ptak's "Do Nothing Portfolio."

    Rekenthaler's conclusions are:
    1) Don’t sweat an index’s details.
    2) Worry not about being fashionable.
    3) A little diversification goes a long way.

    I disagree with his first conclusion although he did state that low costs are a key consideration (I concur) .
    Link
  • Comparisons hiding in plain sight. FDGRX 1024% vs QQQ 687% over 6115 trading days. If you want high octane which I do not. Comparing QQQ not SPY. Not a recommendation.
  • Part of FDGRX success is that it has been closed since at least 2008.
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