Don't Buy The S&P

Small stocks with strong earnings are cheaper. You can even buy them through an index fund

In the trenches we call them the generals. They are the big-dollar stocks, the companies that make up the Standard & Poors 500. Most of the Generals go up year after year, and they buy back lots of their shares. We stock pickers hate them--and with good reason. A machine, buying shares of the S&P 500, has beaten the vast majority of stock pickers--including 77% of those who ran mutual funds over the past five years. It makes us all look bad.

Most professional investors, including me, scorned index funds for years. I used to think, heck, if I just picked...

Want the full story?

Subscribe Now

Subscribe
Subscribe

Get TIME the way you want it

  • One Week Digital Pass — $4.99
  • Monthly Pay-As-You-Go DIGITAL ACCESS$2.99
  • One Year ALL ACCESSJust $30!   Best Deal!
    Print Magazine + Digital Edition + Subscriber-only Content on TIME.com

Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!