Forget the S&P 500 for a moment. Hold your breath and take a leap into my hypothetical parallel universe where there are only two companies: Apple and IBM. In this universe the most popular investment product is the S&P2 Index. It has been the gold standard for generations. Michael Burry, David Tepper, Chuck Acre and Ray Dalio have ALL failed to beat the S&P2 Index over the past decade. David Einhorn was beaten by the S&P 2 so badly that he closed up his fund and moved to Atlanta, GA where he is pursuing a new goal of becoming the world’s oldest and longest practicing contortionist in the hipster area around Little 5 Points.
I love this post! Have been trying to create something similar...I was able to screen for 5% (or greater) growth using Fidelity/TDA scanners, but is there a quick method or tool you used to calculate the cash distribution based on the market cap weightings of your final picks? Interested in doing something similar myself, but if my stock selection varies slightly, it throws off the numbers. Thanks!
my strategy is to look at capital allocation decisions and financial statements of sp500 components and eliminate those that I feel have poor management or decisions. Yes there are quite a few companies that are being silly. I choose the subset I feel are more intelligent.
I like that approach. My objective with this process is to keep the criteria impervious to curve fitting or subjective analysis. I am sort of lazily working on a project that's probably more similar to what you're doing, where I bring my own views of things qualitatively into the mix more, but for most folks the safe thing to do I think is minimize the potential for error, and using revenue and sectors is pretty damn safe :)
Haha - time will tell. I'm trying to create something that will last for a long time - don't see them as being more than a hedge over any full cycle or longer
I love this post! Have been trying to create something similar...I was able to screen for 5% (or greater) growth using Fidelity/TDA scanners, but is there a quick method or tool you used to calculate the cash distribution based on the market cap weightings of your final picks? Interested in doing something similar myself, but if my stock selection varies slightly, it throws off the numbers. Thanks!
Thanks! I don't know of a tool that does that, I would love to know if you find one though, please do let me know!
Suddenly equal weighting doesn’t sound so bad… ;-)
my strategy is to look at capital allocation decisions and financial statements of sp500 components and eliminate those that I feel have poor management or decisions. Yes there are quite a few companies that are being silly. I choose the subset I feel are more intelligent.
I like that approach. My objective with this process is to keep the criteria impervious to curve fitting or subjective analysis. I am sort of lazily working on a project that's probably more similar to what you're doing, where I bring my own views of things qualitatively into the mix more, but for most folks the safe thing to do I think is minimize the potential for error, and using revenue and sectors is pretty damn safe :)
GOOG should be part of Communication. Isn't it? TMUS is also Communication but you didnt highlight it in grey.
Fixed TMUS. Google is worth an exception IMO, good catch!
You're writing an article in August 22 and immediatly removing any commodities companies? This is preposterous.
Haha - time will tell. I'm trying to create something that will last for a long time - don't see them as being more than a hedge over any full cycle or longer