Beating The Market by Over 15% – In Only 3 Months!

Earlier this year, I invested all of my non-retirement money into the ever terrifying … stock market! So, how have I been doing?

Great! So far.

My portfolio has had real gains of about %18 in just 3 months. Not only is this return rate far greater than my own expectations, but it is far better than what the overall market has done.

In the same time frame, the DOW increased 1%, S&P 500 increased 2%, and the NASDAQ increased 7%.

Not only did my portfolio beat the market by a huge margin, 9 out of my 11 stock picks have gains of over 10%, and only 1 of my stocks has any monetary loss at this moment.

Whether you have been hurt in the past by poor investments or simply too scared to dip your toes into the treacherous sea of investing, I strongly believe that everyone is capable of obtaining good ROI if you are willing to invest.

buffet quote

Doing Your Homework

My cousin, who I respect very much, strongly believes that investing in ‘The Market’ is a form of glorified gambling. I believe that many people share the same exact feelings when it comes to putting real money into the stock market.

After all, who can really predict which stocks are going to go up and which are going to go down?

Well, I guess I can, and I bet you can too!

The only thing you have to do is STUDY!!! I studied every single stock I bought for hours, days, and sometimes even weeks before I made the actual purchase. I inspected their earnings reports, analyzed their charts, and pored over every news article about that company that a Google search would return.

Investing recklessly without doing your homework will only get you burned. Avoid penny stocks and invest in companies that you know.

A good rule-of-thumb is to study your investment option as long as it took for you to make that amount of money. If it took you 1 month to save $100, then you should take roughly a month to think about where to invest this money.

Investing Early Is The Key

It may not seem obvious right now, but I easily could have had a negative %15 return instead of a positive one. Even if I was faced with a bad quarter, a few bad stock picks, or real monetary loss, I would be able to survive due to my ‘long time horizon’.

Having a ‘long time horizon’ is another way to say how many more years I plan to work until I want to ‘retire’. The stock market, on average, has 2 good years for every 1 bad year. That means that even if 2017 was going to be a recession year, I would still make out ahead if I stayed committed to investing in the following years.

Personally, the opportunity cost of missing a positive growth year of the market is one I cannot bear. If I didn’t invest because I was too worried about that market being ‘too expensive’ or that the ‘political climate’ made the economy unstable, then I would be missing out on a huge chance.

albert einstein quote

It is unfortunate that so many people choose to be victims of compound interest through debt rather than taking advantage of it.

Beating The Market Does Not Matter – Beat Inflation

I would not have cared whether I received market returns, less than market returns, or more than market returns.

Even if I received a 3% ROI, that is 3% more than I would ever receive in a typical savings account.

The only thing that matters is that my money is doing more than sitting in a savings account. If your money has been sitting stagnant in a savings account for a long period of time, you are actually losing real value due to the nasty little devil named … ‘inflation’.

By the nature of stocks representing companies that sell services or goods, inflation is actually embedded into the price of the stock market. That means that once you have your money actually invested in stocks, inflation is no longer nibbling away at your hard-earned money.

I have gone over other types of asset classes and the pros/cons of each in my ‘Retirement Account’ article. The image below is specifically for stocks and stocks are definitely my favorite asset class.

stocks pro con

Investing in stocks successfully, and even beating the market, is absolutely a possibility for everyone today.  Being a successful investor simply requires putting in the effort to become one and having the proper mindset to commit to Financial Independence.

You, the reader, are completely capable of having a portfolio perform similarly to mine or even better. The only difference between you and me is having the right mindset and putting in a little effort.

– Jack

P.S. You could have easily invested in only one stock, Amazon (AMZN), and obtained a 19% return, while totally crushing the market! Seems too easy…

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3 comments

  1. Thank you for sharing and congrats on your success this year! Personally, I’m an indexing guy. I’ve lost $20K in 2015 dabbling in coffee futures so I stopped trying to be so “smart.” I’ve done very well overall. Even though I index, I do tilt quite a bit. Especially in my taxable accounts. I’m liking emerging markets right now. They’ve had quite a run the past year and a half or so (I have about $200K allocated to emerging markets), but I still see some room there because of the lower valuations. Time will tell.

    Liked by 1 person

    1. Yes! There is a general feel that EMEA is going to do well this year (and already has).

      But whatever your investment vehicle is, you need to become a master of it. I was looking to bitcoin and cryptocurrencies as Bitcoin has had a hell of a run this year!

      Thanks for your comment!

      -Jack

      Like

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