No. of Recommendations: 2
So, one really easy way to beat the S&P 500:
(1) own the stocks directly, not via an index fund. Lots of brokerages have a one-click buy command if you upload a list.
(2) for your list of stocks to own, just use a list that is at least a year out of date. Done!
1. Has this technique been backtested? What are the numbers? (When I was younger, I would have stayed up all night, or two or three, and do it myself, but I'm too old for that, and I assume someone else has already done it)
2. From a US tax point of view, this could potentially become very tax inefficient. If you buy an S&P500 fund or ETF, the only taxes you may owe are on capital gain distributions, but most such funds try to run efficiently internally to avoid excessive amounts of it.
3. From any tax point of view, it could make a tax return quite a bit more complicated. I assume that in addition to adding/subtracting companies, there would also have to be substantial rebalancing which could cause many transactions in some years.
4. If this is so good and so easy to do, why hasn't anyone created an ETF or regular fund to do so?
