How you can beat fund managers stock market returns

I’ll explain how to beat over 89% of hedge fund managers over the long term and without having to spend more than 2 minutes a week looking at stock prices. Here are a 4 simple steps of how to do this.

Step 1: Buy a low cost total us stock market index fund. (VTSAX). Buy every week, no matter the price, no matter if it is at an all time high or at an all time low. BUY.

Step 2: Spend as least amount of time looking at charts. Yes you read that correctly, go get a hobby, read some books, spend time with family, but whatever you do, stop spending time looking at stock prices or stocks in general. Keep buying and let time do it’s magic.

Step 3: Wait. Once you start investing all you have to do is wait. Investing is about time IN the market, not TIMING the market. So just wait and with time your shares will rise in value. Do not sell your shares. Only buy more.

Step 4: Turn off the noise. Do not listen to what the media is saying about recessions being near, or about how the US is going to collapse. Look, if the world is going down a very bad path, your neighbors will be talking about it or you will hear about it while you are at the grocery store buying milk. Keeping distractions low will help you not panic through the markets natural ups and downs.

It’s actually that easy. I truly believe the more you complicate investing, the more money you will lose.

If you want to try to beat the market go ahead and make another brokerage account with some extra money and spend time researching and picking individual stocks.

Now do that for 5-10 years and compare the returns of just doing what is in the 4 steps I described. If you beat the S&P 500’s returns, congratulations!

You did better than 89% of hedge fund managers! If your individual stock picking was subpar to the S&P 500’s returns, then….. wow! You wasted a lot of valuable time that could have been used to just live life.

Any who, you are free to do whatever you feel is right. I will now post below about how the longer the timeframe, the lower the probability that hedge funds beat the S&P500. Plus Warren Buffets famous 10 year bet.

Here is some more data from 2011 to 2020.

This dataset was also used by American Enterprise Institute in their analysis, so the data must be accurate. All the data used in this analysis is shared as a Google sheet at the end as well.