Focusing on just the S&P 500 through a tracker fund is a decent place to start investing. It will get you results that beat whatever the banking system gives you.
But for the more savvy investor, the S&P 500 is not where you want to stay if you want to get the most out of your hard-earned money.
Why? The indices are an average of a group of stocks, so investing in an average will mean average results.
- The S&P is an average of 500 stocks.
- The Nasdaq is an average of 100 stocks.
- The Dow Jones is an average of 30 stocks.
To achieve results that outperform the market — something very few manage to do but is far simpler than people ever realize — requires you to be able to scan and analyze for a handful of stocks that are performing better than the average.
Seeking these stocks requires training and the proper tech setup, but the investment of time and money is well worth the long-term rewards. This should come as no surprise as to be better than the average, you have to think and do better than the average.
The S&P 500, my primary indicator of overall market conditions, is still trading 14% below its current all-time high.
Below I have the monthly time frames for five obscure stocks picked out by my scanning and analysis process, which I am monitoring and have moved more than 50% since the start of the year. They are also printing new all-time highs while the indices have declined.
ConocoPhillips (NYSE:COP)
Chevron Corporation (NYSE:CVX)
EOG Resources Inc (NYSE:EOG)
Marathon Petroleum Corp (NYSE:MPC)
Valero Energy Corporation (NYSE:VLO)
With the S&P 500 showing signs of finding support at $4,000, these stocks are likely to push further up if the indices recover, so getting in early will do wonders to your portfolio. I am waiting for further confirmation of a recovery in the market before adding any of these to my portfolio.
The fact stocks are creating new all-time highs is a sign we are not in a bear market or even approaching one, not just as yet anyway, as is often touted by analysts and so-called experts across media channels. For those in the know, it is comical.
It is just a lot of fear-mongering which leaves the vast majority of people stagnant with disastrous consequences.
Remember, financial literacy in adults is poor, and I’d argue the financial industry professionals who you likely gave control of your money are certainly not any better.
The education system is designed to create good employees, not investors, even in the finance space so take extra care with who you choose to be your investing role models.
A great book to read is "Way of the Turtle: The Secret Methods That Turned Ordinary People Into Legendary Traders" by Curtis Faith. It is a true story of how Richard Dennis taught a group of everyday people to follow his system based on long-term trends and how those who stuck to the plan did remarkably well.
To bring some perspective, Warren Buffett has achieved on average 20% per annum with his complicated value investing approach. Richard Dennis, in comparison, achieved over on average 110% per annum with his simple trend-following methodology, yet is a name that you will never hear mentioned across the major media channels, certainly not in the same breath as Warren Buffett.
Would you rather make 20% a year using a complicated model or 110% a year using a simple system that can be seamlessly adapted around your busy lifestyle?
I read "Way of the Turtle" in 2007 and never looked back.
Photo: Gsign76 via Shutterstock
