I recently met with an advisor who offered a plan that consistently under performs the S & P, which it indexes. He said this plan offers protection against down markets. Indeed it out performed the S & P in the last 3 large downturns, however, I have a hard time believing you can't beat the market, and should be satisfied with less than an investment that the S & P can offer.
Responses (3)
For most of this century, gold far outperformed all stocks. I asked an advisor friend why he continued to recommend worthless stocks when gold was obviously a better investment. He explained:
"My clients don't know anything about metals and don't trust them. About 90% would reject that advice. Maybe 5% would actually buy gold, but they would sell it all the first time the price dropped and they would blame me for their losses. I can't make a living alienating 95% of my clients."
You can't argue with that analysis. A financial adviser is not selling performance, he is selling sympathy.
One way to try to beat the market is to take on more risk; but while greater risk can bring greater returns, it can also bring greater losses. Success is not guaranteed. You might also be able to outperform the market if you have superior information.
Some investors have made fortunes through what appear to be superior analytical skills. Household names like Peter Lynch and Warren Buffett achieved their successes through picking individual stocks.
Yes, you may be able to beat the market, but with investment fees, taxes and human emotion working against you, you're more likely to do so through luck. If you can merely earn the same returns as the market, you'll be doing better than most people.
Long term however gold is terrible. This century only covers 17.5 years. As stocks continue to climb gold will continue to fall.
With that said, your answer is unfortunately a nonanswer.