If you haven’t seen the news already, a financial-industry titan just turned 30.
That’s right…
The SPDR S&P 500 Trust (SPY) is now 30 years old. These days, it’s the world’s largest exchange-traded fund (“ETF”).
When SPY launched back in 1993, it changed the game…
Before that, tracking the broad market S&P 500 Index was tough for individual investors. Expecting folks to put together a representative basket of stocks that large just wasn’t reasonable.
In that way, SPY “democratized” investing. But that doesn’t mean it was all good…
In fact, these days, I think SPY’s very existence might hinder many investors.
I’m not even talking about its high fee structure. We all know the ETF is expensive compared with many of its competitors.
The problem with SPY is deeper than that. And as I’ll show you today, this problem was one of the driving forces behind the Power Gauge’s creation after the 2008 financial crisis…
At one time or another, I’m sure some financial expert has told you to “just buy the S&P 500.” It’s one of the mainstream media’s go-to pieces of investing wisdom, too.
But that doesn’t mean it’s good advice.
Think about it…
Jack Bogle, the founder of fund-management giant Vanguard, spent his life trumpeting the virtues of index investing. Despite that, the company proudly displays the annual and lifetime returns of its actively managed mutual funds on their respective product pages.
In fact, almost the entire concept of Wall Street is that folks can outperform the market. And it’s a great competition. The world’s best minds try to find an edge over each other.
Yet when it comes to individual investors, the message is very different. The industry tells individuals to just ride the tide in and out – and hope for the best.
Folks, they just want your money.
They want you to provide the liquidity that makes their fancy maneuvers possible. And the overall message is that you should be grateful for the outcome… whatever it is.
Regular readers know my wife experienced this horror firsthand in 2008. She waited as her financial adviser rode the market down to the near bottom. And even as the market crumbled, it appeared that his only plan was to keep her assets under his management.
Righting this wrong brought me out of retirement. And it’s why I’ve dedicated more than a decade to sharing Wall Street’s tools, like our Power Gauge system, with individual investors.
But ever present in the background is SPY. For 30 years now, it has called out to investors…
“Don’t invest actively. Just ride the tide.”
“Just buy the broad market, sit back, and let it all take care of itself.”
It’s a siren song. It has lured many investors. And that’s why I created the Power Gauge…
My one-of-a-kind system isn’t a crystal ball. It can’t predict the future – no one can. But it can give individual investors like you a critical “edge” over the markets…
The Power Gauge uses the foundational approaches of Wall Street’s greatest minds.
By doing that, it empowers people to make prudent decisions and actively manage their portfolios. Instead of relying on someone else, these folks can take control of their financial lives.
So the next time someone says to “just buy the S&P 500,” remember this essay…
SPY just turned 30 this week. It revolutionized the financial industry. And it’s here to stay.
But you don’t need to give in to its siren song. Make your own investing decisions.
Good investing,
Marc Chaikin
