Everyone is fixated on outperforming the S&P 500, and that fixation is making them lose time, money, and sleep. There is an easier way.
Wellesley, MA (PRWEB) March 3, 2010
“Everyone is fixated on outperforming the S&P 500,” explains Fragasso, “and that fixation is making them lose time, money, and sleep. In reality, it’s pretty much impossible to outperform the S&P 500 consistently whether you’re using mutual funds, picking stocks, or trying to time the market. Unless, of course, you use my method.”
In the video, Fragasso compares investing to playing LeBron James in a game of one-on-one. Playing LeBron in a game of basketball and expecting to win would be delusional, but engaging him in a game of chess or lawn darts dramatically levels the playing field and greatly increases the chances of winning. It’s the same way with investing.
“The best way to beat the S&P 500,” Fragasso explains, “is to invest in an asset class that beats the S&P 500. And over the last ten years, a wide variety of asset classes -- ranging from boring old U.S. bonds to natural resources, real estate, and emerging market bonds -- have done just that."
Essentially, as this table shows, investors could have parked their money most anywhere and outperformed the S&P 500 for the 10-year period ended January 31, 2010.
10-Year Index Performance as of 1/31/2010
Emerging Market Bonds -- 10.73%
US Real Estate -- 9.77%
Emerging Market Stocks -- 9.42%
Natural Resources -- 8.94%
US High-Yield Bonds -- 6.87%
US Intermediate Bonds -- 6.53%
US. Small-Cap Stocks -- 3.29%
International Stocks -- 1.63%
S&P 500 -- 0.80%
The point, of course, is not to avoid investing in the S&P 500 because it could very well be the top-performing asset class for the 10-year period ending in January 2020. Rather, investors should strive to build a well-diversified portfolio with asset classes that zig when others zag.
“The key takeaway," explains Fragasso, "is that people need to remember and appreciate that they worked hard to earn their money and they should make sure it’s working just as hard for them.”
After 25 years as a senior executive in the financial services industry -- and disliking much of what he saw -- Phil Fragasso left the corporate world to focus on consumer advocacy for individual investors. Phil believes that the traditional approach to distributing investment products and advice is seriously flawed and needs change.
For more information, please contact Phil directly or visit http://www.HardWorkingMoney.com.