How To Watch Your Wealth Grow: What You Can Learn from 2023’s Biggest Winners

Do you want to make more money in less time investing in the stock market?

Then stop what you are doing and read this post.

I will share the secrets to stress-free investing.

The Numbers

As of mid July, the S&P 500 index is up 8.9% so far in 2023, or 9.7% including dividends. But the most of that increase is due to the surging prices of its seven largest companies.

Seven massive stocks are responsible for the vast majority of the stock market’s gains in 2023. These are:

  • Apple: up 36%
  • Microsoft: up 37%
  • Alphabet: up 39%
  • Amazon: up 44%
  • Nvidia: up 159%
  • Meta: up 120%
  • Tesla: up 66%

As a group, these combined these are up 56.2% this year.

As a whole, the S&P 500 is up 8.9%.

If you only figured in the first five above, leaving out Meta and Tesla, with dividends, the S&P 500 would be up 1.5%. Without all seven of them, the S&P 500 would be negative right now.

The S&P 500 Explained

The S&P 500 is the most widely used yardstick for the U.S. stock market. It is calculated as a “market-cap-weighted index”. That means that the companies with the biggest market caps have the biggest impact on how the overall index moves.

Market caps are calculated by multiplying shares outstanding by share price — can be thought of as a price tag, or total value, of public companies.

There are currently 506 members of the S&P 500. Apple currently has a weight of 7.58% and Microsoft has a weight of 6.8%, Amazon 3.15% and so on. The seven biggest components are the ones listed in this article, and they currently make up around 27% of the index. The other 499 components make up the remaining 63%.

What’s the Secret to Capitalize on This Trend?

Every year there are outliers that greatly outperform the stock market. How can you personally to take advantage of this? And is there a way to do it with very little time and no stress?

Yes.

The answer is one of the greatest secrets in investing. And it’s so simple most people reject it when they hear it.

Wait for it.

Buy and hold an S&P 500 ETF. Don’t pick individual stocks, it picks them for you. Don’t try to time the market. Set a monthly budget and put it on auto-buy.

What? Why? You said it here would be a secret!!!??? You lied to me!

Hold your horses, let me tell you why this strategy will work for long-term steady gains. You won’t become a billionaire, but you won’t trading either. You are not George Soros or Warren Buffett, and if you were, you still wouldn’t win by timing the market with individual stocks (that’s not how they made it either) 99.9% of the people reading this will not make 100X gains and then keep them trading.

Actually the majority will be able to make a few great trades and then will lose their gains because trading stocks and crypto is mostly luck-based and not-skill based.

Here’s why you need to use this simple and boring strategy to watch your wealth grow.

Predicting the Market is a Losing Game

In 2022, hedge funds outperformed the market, after underperforming for the past 13 years. This is mind-blowing.

When I first heard this, I assumed that of course these hedge fund folks were so dumb, and therefore I must be smart, so therefore I can do it. Turns out, several years of trading experience showed that I was wrong. If professionals whose only job it is to outperform the market, can’t predict the market, cannot do it, there is a big chance that it cannot be predicted.

Last year’s winners can be this year’s losers, and vice versa. Or the trend may continue for the next seven years.

The real smart move is to realize that this CANNOT be controlled, and not try to control it.

Time Wasted

You can spend 500 hours assimilating metrics and trends, stay up all night (I did a few times).

The fruits of all this is to come to a great certainty that one cannot control and predict the market. And one has to drink a lot of coffee to stay awake. And one is still tired.

Stress

Staying up late, attempting to time every Fed meeting, charting, charting, charting, and one gets stressed out. It’s another thing to worry about.

The Winning Way

By “setting it and forgetting it” and putting a monthly investment amount into a fund like the S&P 500, or for example into an asset like Bitcoin (if you think crypto is the future), you get the following benefits:

  • More time
  • Less worry
  • Way better odds of success

I use this strategy.

One benefit is better odds. It incorporates the idea of investing into a fund (an S&P 500 ETF in this case) that captures all the winners. If these seven above drop next year and seven others are the big winners, they will influence the overall market. Either way, you win more than you lose.

How good are your odds? We can’t predict the future, but let’s assume you could hold an S&P 500 ETF back then, which you couldn’t until the 1990s. The 10-year “rolling average,” has been zero or positive every year since 1939, with gains around 10% per year pre-tax.

Second, this strategy uses dollar cost average, or DCA, so one doesn’t try to time the market which can cause many and massive mistakes. Reduced stress and time spent. Also, better odds. If you want a job as a trader, get a job as a trader. It still wouldn’t be my choice, but that would be better than gambling part-time.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *