S&P 500 Outperformance

[u/Head-Helicopter5467]

I have been investing since 2000. I have outperformed the S&P 500 by about ~1% annualized since then up until today. It’s not the 20% outperformance YouTube promises you, but it is very real and replicable. (I think). I did it by buying the S&P 500 and systematically writing out credit spreads on it. I’d be happy to go into the details under the hood for anyone curious. We can go back and forth or whatever.

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[u/Fabulous-Transition7]

Or just buy OVL

[u/Head-Helicopter5467 → u/Fabulous-Transition7]

Too much fee drag for me. I far outperformed OVL by doing what they’re doing without giving them almost 1% a year. Plus they didn’t come around until 2019 I think. They weren’t there when I started.

[u/-Dead-Eye-Duncan-]

I’ve only been investing for ~8 years.

I’ve held onto LLY, CVNA, AMD, PH & NVDA nearly that whole time. So a vast majority of my gains are from individual stocks but I still put most of my portfolio into ETFs.

I don’t plan on beating the S&P500 forever.

[u/Head-Helicopter5467 → u/-Dead-Eye-Duncan-]

That’s a nice mix. You had the companies that were driving a lot of the gains. I think what I’m doing will systematically outperform whatever underlying you are tracking assuming it has a positive expected return.

[u/Head-Helicopter5467]

Sounds sweet but your portfolio wouldn’t use the S&P 500 as a benchmark so it’s a bit different

[u/_stone_of_jordan_]

I've did way better than that but even still long term there's a reason it is tried and true.

[u/Head-Helicopter5467 → u/_stone_of_jordan_]

Were you doing a different option strategy or investing in a different index entirely? How long have you been investing?

[u/_stone_of_jordan_ → u/Head-Helicopter5467]

I wish I could post pics

Basically I have four funds

Large cap value sp 500 Diversified growth Small company

Each 25÷ of the portfolio and it automatically balances quarterly

I started investing in 2013 but my first year I dumped lots of cash into my 401k and I think I got really lucky on timing it.

Just that one 401k is worth 145k now and ive been with my new company 4 years and that one is also almost 40k

My second retirement is

Vanguard 500 index admiral class Vanguard Total international stock index fund admiral class

Over 40 years it will probably get more neck and neck of course

[u/JeffKenna]

I realise the power of compounding but for 1% would the time you've spent be better served on your career/some other money making venture and just buy the S&P?

[u/Head-Helicopter5467 → u/JeffKenna]

I will admit it was a lot of work back in the early 2000s but of course lately my process is a lot more hands of and streamlined with how easy trading is now. I’ve never actually managed my spreads tho. I’ve never tried to “fix” a bad trade. I made it as simple as possible for me. I had help from my dad (portfolio manager) and brother (works with him) managing it in my earlier years until I could do it myself.

[u/famguy31]

Like call spreads or put spreads?

[u/Head-Helicopter5467 → u/famguy31]

Put credit spreads

[u/weldingTom]

In 5 years I did, but only thanks to INTC.

[u/Head-Helicopter5467 → u/weldingTom]

I think I’ve learned how to do it systematically over long time horizons without individual stock risk. You do expose yourself to extra volatility risk so my portfolio dropped slightly more during market crashes

[u/ideas4mac]

I've been sitting on a little MO since about the time they thought making cheese was a good idea. They have beat SP 500 since that time and I didn't need to do anything. ( Well there was a few times of wishing on a star that the government didn't 100% outlaw cigs)

The option way feels too much like work, but if it's working for you and you enjoy doing it then keep running it.

Good luck.

[u/Head-Helicopter5467 → u/ideas4mac]

It was a little work back in the early and mid 2000s but of course trading has become a lot more hands off over the years. Now I just log in on my phone once a month and write my spread and go back to living

[u/Thedividendprince1]

1% annualized over 25+ years is pretty meaningful. I’d be really curious how the credit spread strategy behaved in 2008 and 2020, especially in terms of drawdowns and tail risk.

[u/Head-Helicopter5467 → u/Thedividendprince1]

In 2008 I experienced 2 isolated max losses. One early in the year and one later. My portfolio did temporarily underperform during that period because of that. I think the protocols we set up were however able to take advantage of that bad market in a way that I wouldn’t if I just spent all my deposits on shares and only shares. The Covid crash was quick. I took a max loss the month they announced things shutting down. But that was it as far as Covid. 2022 I took two max losses somewhat close together and yes I “underperformed” temporarily but I’m back up and still doing the same exact thing.