Warren Buffett probably the greatest investor of all time had talked about beating the S&P 500 consistently. The savvy investor has did 155 times better than the S&P 500 since he created Berkshire Hathaway. He said that is not very easy to beat the S&P 500 consistently.
Buffett's main problem with investors who try to beat the market isn't with people who take the time to research stocks and construct a portfolio of attractively valued companies. This is how Buffett became wealthy.
My question to you guys is how do you beat you guys beat the market or get close to it on a consistent basis?
The reason most funds don't beat the S&P500 is because they are contracted to maintain a portfolio of a certain volatility. If I tell you I beat the S&P500 by 3 times trading a single share that would be significantly less impressive than a return twice that of the S&P500 with a hedged portfolio (with lower volatility).
Post performance on resume - 10 trades that outperformed the benchmark (Originally Posted: 01/21/2014)
I have been on the buy side for 2 years. Should I list the performance of the recommendations I made to the PMs last year that were acted on? ie Last year, analyst's recommendations resulted in 10 trades that outperformed the benchmark by an average of 500 basis points?
are you applying somewhere? i feel like this is something better to put out there during an interview, instead on a resume (which is still going to be just one page)
thanks for the comment.
i am going to an informational interview. it only takes up one line on resume. the thinking was that it shows i was meaningfully involved in the decision-making process and generated some results, granted it was only a 1-year window.
Exactly, it doesn't take much space at all and it instantly erases any doubts/suspicion (in terms of your contribution) of the person who's reading your CV. You might as well show that you've contributed/were successful in your role without the reviewer having to ask for specific figures and details.
The Average Fund Manager Can’t Even Beat Their Benchmark! (Originally Posted: 02/13/2014)
Even the average PM must be a smart guy from a pedigreed investment background, right? So why can’t they beat the S&P?
Imagine for a second that the only investable universe is the S&P 500 and the only fund out there is the WSO Fund that you personally manage. Could you outperform the benchmark? Of course you can’t. You ARE the benchmark. It doesn't matter how smart or sophisticated you are, there is no one else to buy from or sell to.
Let’s expand. Now imagine that there are only two funds and they can only invest in the S&P 500. Can one manager outperform the benchmark? Sure, one manager could overweight winners and underweight losers and outperform, but only if the other manager underperforms. Collectively these two managers still are the benchmark and their performance as a collective will reflect as much.
You can see how the math scales. There are literally thousands of diversified large cap managers who cover the S&P 500 space but when the contents of their portfolios are summed they basically are the S&P500. Subtract out non-zero management fees (no matter how small) and you can see that it is nothing short of a mathematical certainty that the average manager will underperform their index.
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