Why Outperforming the S&P 500 Index Matters


That’s how much money a 68-year-old would have today if they had invested $10,000 in the S&P 500 Index when they were still 18 years old.

It’s an average annual return of nearly 11.3%.

But it’s only possible if they had reinvested all the dividends paid throughout all those years… and not spent a single penny of their gains.

That’s a lot of patience to practice over 50 years.

As we get older, we (hopefully) learn to be more patient. The only problem is most older folks don’t have 50 years to invest to see these kinds of returns materialize.

It takes a special kind of individual to learn to start investing at a young age and stay the course for 50 years without wavering.

That’s just not the way most folks are programmed…

We tend to be aggressive risk-takers when we’re younger. After all, it’s hard to wait for that distant payday.

As we get older, we tend to become more risk-averse. And we usually don’t mind waiting for the guarantee of stable returns.

That’s why investors constantly seek outperformance. It’s the only way to see those kinds of gains within a time frame that doesn’t involve already being unable to enjoy life (or worse) by the time they cash out.

For instance, if you could find an investment that had a consistent average return just 3% higher than the S&P 500, you could cut down the waiting time by 10 years.

You would have nearly $2.1 million by the age of 58 instead of 68.

To bring that waiting time down by another 10 years, the investment must return an average 19.5% a year for three decades.

Now, investing for 30 years sounds doable. Start young, and you’ll be barely 50 years old when that final big paycheck arrives.

But finding an investment that generates 19.5% annually for three decades is no small feat.

If fact, it’s nearly impossible to do so without a little bit of both patience and time that I mentioned above.

As the late Charlie Munger – the legendary Warren Buffett’s longtime business partner and friend – famously said…

Investing is where you find a few great companies and then sit on your ass.

It’s not that investing in the S&P 500 Index is wrong. It’s still one of the most profitable trades out there.

But if you want to live a comfortable life with the help of the stock market, you’re going to have to find great companies that have the potential to deliver those kinds of outperforming gains.

That’s why we’re always looking for companies that are outperforming the S&P 500 in our Power Gauge system.

As regular Chaikin PowerFeed readers know, the Power Gauge tracks more than 5,000 stocks using 20 different factors in four major categories – Financials, Earnings, Technicals, and Experts.

Then it distills all that information into a single, actionable overall rating – ranging from “very bullish” to “very bearish.”

Put simply, it allows us to see which stocks are positioned for success and outperformance. (And on the flip side, it also shows which ones we should avoid.)

Here at Chaikin Analytics, that’s how we guide our readers and subscribers to the best opportunities in the market – and find the stocks that look primed to outperform.

Good investing,

Vic Lederman

Editor’s note: If you don’t already have access to the Power Gauge, you can get it right now for an incredible discount…

We’ve put together a deal to get a full year of Chaikin Analytics founder Marc Chaikin’s Power Gauge Report newsletter at 75% off the normal price. This also comes with a year of access to our Power Gauge system. Get all the details and find out how to get started by clicking here.

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