Be Careful What You Wish For

Money managers that hoped for more volatility so as to improve their chances of beating the market appear to have been severely disappointed when the volatility finally arrived. As this headline from Bloomberg notes, “Stock Pickers Wanted Volatility. It Made Their Performance Worse“.

That’s why I am pretty stoked that our Three Factor System beat the market once again!

This extremely simple method, which I first disclosed to customers 22 years ago in 1997, beat the market last year. And it beat the market over the past 10 years. And it beat the market over the past 15 years, and of course, the past 21 years.

To give you an idea of how hard that is as time goes by:

  • Only 35% of active mutual funds beat the market in 2018.
  • Only 10% of funds beat the market’s performance over the past 10 years.
  • Only 7% of funds beat the market over the past 15 years.

Not only did we simply beat the market over the short term and long term, we beat it by huge margins. Had you invested in an S&P 500 Index funds in 1997 and reinvested dividends, you’d have nearly 4 times as much money as you started with. Had you followed our simple 3 Factor System, however, you’d have enjoyed a 16-fold increase in your wealth. And you’d have done so with less risk!

Our outperformance this year was driven by our avoidance of the recent decline in the stock market.

The chart above is the simple indicator that prompted us to exit before the carnage.

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