You Can Outperform The Market, Here's How

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I am not a professional investor and have never claimed to be. I'm an amateur investor sharing my experience of what I've learned, where I have had success, and where I've had failures. I share my thoughts on investing and performance with transparency. My approach and goal to investing is to buy high-quality long-term investments in world-class businesses that I call "compounders". I view my investments as businesses, not as stocks. Before creating content on YouTube full time I worked as a senior-level programmer for 8 years. Over the years as a programmer, I compounded my knowledge of development. I take the same iterative learning approach to my study of investing. I study investing as a craft in the continual pursuit of being better. I will make mistakes in investment decisions from time to time. Results are not guaranteed. Please do not blindly follow me into any investments, and make sure your portfolio and investments are built around your specific income, risk tolerance, personality, timeline, and overall circumstances.

[tatianastarcic]

Market declines, soaring inflation, a significant increase in interest rates by the Fed, and rising Treasury yields all point to additional losses for portfolios this quarter. How can I profit from the present market turbulence? I'm still debating whether to sell my $125k ETF/Growth Stock portfolio.

[meetsachin]

No Advertising, No selling, No Bullshit, Straight to point. Really appreciate for your content! Keep it up 👍

[carlosalfredopedriquealber]

“The big money is not in the buying and selling, but in the waiting" - Rest in peace Charlie Munger

[Allen-L-Canada]

According to the IRS, about 95% of all those who manage their own money, lose money doing so.

Fidelity did a study many years ago during the days of Peter Lynch. Lynch was achieving the astounding rate of return of nearly 22% per annum. What Fidelity found out though was that the vast majority of people buying Lynch’s mutual fund were actually losing money by buying and selling the fund in an effort to “time the market.”

The answer then, to the question, is that perhaps 5% of “ordinary investors” actually make money, and fewer than that even beat the benchmark S&P-500.

[moneycessity]

It makes sense that roughly 50% of the companies would outperform the average in a single year. BUT, I would be curious to see how much the percentage of outperformance is affected by increasing the duration from 1 year to 5 or 10 years. Great video; thanks, Joseph.

[Michael-DS]

Hey! Statistician here. Good video. I just wanted to point out one thing at around 10:30 - to get the odds of picking the right stocks each year for say 2021, 2022 and 2023, you have to be in the right each year. To find these odds, do 25% x 57% x 48%. The odds of you picking the winning stocks for 3 years in a row is 6.84%. Just thought I'd throw that in as part of the debate.

[BenjaminMcLeod]

While this provide an actual explanation on how you buy your stocks. After buying stocks for just over 10 years, i'm still struggling to make gains. How do i adjust or revamp my $2M portfolio? should i consider some defensive investments?

[blaquopaque]

Every week I buy more of whatever is the lowest percentage of my portfolio and try to keep everything around 10%, but what could be my safest buys with $400k to outperform the market in 2024?

[mandar]

I am an etf investor but had confidence following your videos for over an year with single stocks. Picked up my single stocks last year such as amazon, tesla, etc. as your compelling points made sense to me even when they were getting thrashed instead of adding to s&p500. My individual stock is up 50% this year while index in 10s.. So thank you 🙏

[CelticsTony]

Joseph this is a bit misleading. You only have to pick the top 100 companies of the year, but those top 100 are not always the same year to year. That infers youre constantly reshuffling your portfolio each year. This includes a lot of timing - not holding and waiting. Buying an ETF guarantees the opposite.

[cirentXD]

Hey Joseph, I love your content and I mean no hate. What I think you missed to mention was yes, 50% of the index outperforms the index. However, what that 50% is is constantly changing. Therefore, I need to change what I'm investing in more constantly. This additional buying and selling creates room for error. Much easier to just buy the index

[tonysilke]

The market trend can turn around very quickly. In fact, the indexes often switch from a bear market to a bull market when the news is at its worst and the mood of investors is at its lowest point. I read an article of people that grossed profits up to $150k during this crash, what are the best stocks to buy now or put on a watchlist?

[jonashayes]

Idk man I think you are underestimating how easy it is to look at stocks that have outperformed in the past few years or any timeframe. Infinitely easier than picking them BEFORE they outperform. And then another dimension is holding them for an appopriate amount of time. Why hasn’t your portfolio beaten the market? The one that you designed to do just that. Is it easy? For how long can one beat the market? Most fund managers only do so for one year or 2 and then proceed to underperform.

[lez]

There are 3 problems in picking your own stocks:
1) Time to study, get good, pressure, doubt, fear, uncertainty in your picks
2) Risk involved
3) Taxes, you don't pay taxes until you sell, for an ETF there's no need to sell, but if you pick stocks yourself you have to sell when they're overvalued to buy undervalued stocks, creating a taxable movement in between.

So if I have to pick between 10% without any time or worries, and with low risk, and 20% with way more risk, uncertainty, stress, pressure, I will always choose the ETF.

With your analogy of the needles, only 60 needles returned twice as much as the SP500, 60 out of 500, so 440 were not worth the risk of picking individual stocks. I'm not sure if it's worth the risk. In my opinion, if you're not outperforming the market by a good margin is basically not worth it.

[robertgemesi]

Hi Joseph,

I've been beating the market effortlessly for a long time. I don't really like ETFs; I hold about 2-3 of them in a relatively small amount, but I prefer to invest in individual stocks. I have only a few criteria: growing revenue, a rock-solid market position, a fat margin, and finding minimum 5-10-15 year periods where the company has outperformed the market. Obviously, I'm not giving any advice, but in my portfolio, I have SPGI, UNH, LOW, HD, AWR, MA, V, MSCI, ICE, PH, BRK.B, and a few other well-performing companies for decades. Of course, a smaller slice also goes to the magnificent 7, but they don't get more than 15% in my portfolio. I confidently outperform the S&P 500.

What is your opinion on this?

[wh]

But it are not always the same companies that outperform the SP500 each year! So you still have to switch each year to the companies that you believe will outperform... you can do that maybe once, but doing that each year, year after year? and why would you change exactly at 1st January of each year?

[loud]

I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.

[brianwhitehawker]

I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement of about $150k. I want to know: Do I keep contributing to my portfolio in these unstable markets, or do I look into alternative sectors?

[benitabussell]

Overall, 51% of traders think next year would favor stocks, mutual funds, and other equity-based investments, despite Treasury yields and other safer cash-like investments paying big. I’m looking for opportunities in the market that could fetch me $120, 000 ahead of retirement in 2024.

[Progressor-xswf]

Hi, Joseph. You say every year many shares beat s&p500 and you give names. But how many the same shares beat s&p500 past year and current year, for example? I suppose from 10 to 30 companies, it mean the main task is very hard. I must buy and sell from 80 to 100 shares every year. And we must remember about taxes in this strategy.