Gordon growth model and it looks really complex but what I want you to know is you can take the current P 18.5 for the S&P 500 and you can plug it in this equation and you can come up with whatwhat the growth forecast is so here the G comes out to be
maintenance. So what is the liquid capital asset that it can I can buy and it turns out to be like SPY. It's just the S&P 500 in the form of an ETF. So that has returned 15% over the past 6 years. Over 100 years? Maybe 10%? Something like that?
And if you say, hey, I'm about to invest, they'll be like my uncle's brother's son lost so much money in the share market. Let's say a fund like a broad market index fund, like an S&P 500 fund.
And you can get on with doing things that are more important to you and maybe more important to the world. The S&P 500 was 1,600 and change, and this reader was saying, how can I possibly reinvest?
And you can get on with doing things that are more important to you and maybe more important to the world. What's interesting to me about that question is the S&P 500 , as the name suggests, owns basically the 500 largest American companies.
In the '70s, the US had double digit inflation. That's it. How much are you willing to pay for one share of the S&P 500 ?
and the intestine or the kidney, muscle, and brain. Eighty percent of the calories, or 96 calories, are gonna hit the liver, four times the substrate as with glucose. There's no middle ground. And they're winning because the S&P 500 in blue. And here's the stock price of McDonalds, Coke and Pepsi. There's the economic downturn of 2008. And
Well, gold is up 12% a year, but Bitcoin is up 33. What about the S&P 500 ? You're going to get double the performance from BTC that you would get from like the S&P index.
asset which appreciates in value 15% a year and they don't have to worry about it? What about the S&P 500 ? They can just put it into the stock market, right? Yeah, John Bogle's real contribution and the success of the S&P 500 is this idea that
Don't own US stocks. That's a simple strategy that you can act on. But what about S&P 500 ? No. Really? Yeah. And if you have a big position in US technology stock, I personally advise would be to sell them
And if you say, hey, I'm about to invest, they'll be like my uncle's brother's son lost so much money in the share market. like the S&P 500 in the long term, there's ups and downs.
And this line here is the S&P 500 . And the S&P 500 is not right in middle for the very simple reason that managers charge fees. So from scratch, they start from, probably, 1% or 2% behind the S&P 500 .
It's done about 13% annually even though earnings grew about 16% annually. And that's about 5% better than the S&P 500 . Dividend included, it has down about 8% annually over the last decade.
I'm going to do that. This strategy outperformed the S&P 500 in four of the five years that we're looking at here, and it doubled the total return of the S&P 500 . Right, so you'd think, if I'm looking at that outcome, I love it.
Everything else killed it. So let's all imagine that there is a bar graph there for the S&P 500 that says you put your money there, you got $640,000. And all stocks doesn't even have a number but it's better than the S&P 500 .
Let's take a look at the most followed stocks within the most followed market in the world. Those would be the S&P 500 stocks. Let's take a look at what's happened since you learned how to read.
events this is the dot bubble crash um where the market lost 50% this is the S&P 500 the NASDAQ lost almost 80% during this crash I also remember this one well I was I was working as a sales assistant at Morgan Stanley to two technical analysts it's kind of the
As you go off the higher ranks, women start to disappear. This is the S&P 500 . Less than 5% of the CEOs are women.
have the capacity to suffer, because you think about my last three years, we've certainly suffered when compared to the S&P 500 , which has been elevated by sort of global capital flows. And we've had businesses that, right through this, have been investing in their strong global brands, but showing a modest growth at the reporting level
So if you look at that sales pitch, it would put the private equity business at a higher rate of return the S&P 500 with lower risk. Now, some of you may remember, if you ever took a finance course, that that defies all finance theory back from the '50s.
So that's the normal bell curve of the typical results as investors. And this line here is the S&P 500 . And the S&P 500 is not right in middle for the very simple reason that managers charge fees.
The challenge that we face there however is, by definition, our portfolios are very different than the benchmark if the benchmark is the S&P 500 . And the first thing that we really want to think about is passive investors-- they face one point of failure, right--
nominal returns required for the 4% rule to work the problem is that the S&P 500 is currently yielding 5.6% 10-year Treasury 2.47% you do a waited average return of
It's, in fact, a risk-adjusted return story as well. You can take the acquirer's multiple in an S&P 500 universe, select the 5% or the 10%,
I kept looking around for role models, and I said, there's got to be a gay CEO somewhere. And so I looked at the S&P 500 , and I saw there were no out gay CEOs. So I then looked at the rest of the list, and when I wrote the book, you had to go down to S&P 723
conscious public companies have outperformed the S&P 500 by a factor of 10 and 1/2 to one.
What about the S&P 500 ? They can just put it into the stock market, right? Yeah, John Bogle's real contribution and the success of the S&P 500 is this idea that currency is not a store of value.
And if you say, hey, I'm about to invest, they'll be like my uncle's brother's son lost so much money in the share market. How do you-- what do you feel about the S&P 500 and different types of funds that exist?
Those that can consistently beat the market, it's a very small percentage. If you look at fund managers going up against the S&P 500 , less than 0.1% have beaten it over the last 10 years consistently. So they have the rare combination of extreme ability and luck.
funds. I mentioned the one that I like the best is VTSAX, which is Vanguard's total stock market index fund. More common-- and the original fund Jack Bogle created-- is the S&P 500 index fund. That's perfectly acceptable, and the two are surprisingly close.
And what you can see here in black is the S&P 500 over two years.
We've all seen the herd mentality move many, many people to passive indexes. I would remind you that things like the S&P 500 are strategies, right? The strategy there is buy big stocks-- single-line strategy.
They could buy it for 30 or 40 cents on the dollar for what it just went to auction for. But there are years like 2015 where there's a benchmarking issue, meaning the S&P 500 in 2015
They could buy it for 30 or 40 cents on the dollar for what it just went to auction for. and aggregate them in the weights of the S&P 500 .
someone who out-performs a benchmark like the S&P 500 by 1 percentage point a year compounded
For an early period of time, and it's difficult to see on this chart, the excellent portfolios did actually outperform the market. But not since you get a better return investing in the S&P 500 than you do investing in these very high quality, high growth companies, these excellent companies.
of 9.5% in 2008, while the S&P 500 plunged by almost 40%.
through AI. Productivity in the S&P 500 and it's all small companies, AI. And
You know, put your money in either the S&P 500 or the total US stock market and don't touch it for a really long time.
And you can get on with doing things that are more important to you and maybe more important to the world. But do you see any advantage to trying to diversify away from the S&P 500 and think about either global markets, or bonds,
So from scratch, they start from, probably, 1% or 2% behind the S&P 500 . So just because of that, the S&P 500 probably beats out 85% of investors. So you want, always, to think what not to do if you want to beat the index.
and I asked you to keep that in mind that is the S&P 500 which most of you already have in your retirement fund so
They could buy it for 30 or 40 cents on the dollar for what it just went to auction for. So what that allows us to do is go look at today-- where's the valuation of the S&P 500 today, contextualized, versus the last 25 years?
Hallmark of every value investor I mean this is it this is value investing um this is a slide that shows the present day value of the S&P 500 going back to 1860 the index didn't exist back then but they've pieced together what it would be and the red
And I asked him whether he would ever consider just shorting the S&P 500 , because it certainly
And I'm also on a board, AutoNation, S&P 500 company-- I'm on that board of directors.
It used to be a dynastic 60-year run that you would have on a big index like the S&P 500 if you were a big, successful company.
Because we know that even some of the best investors don't actually succeed better than the S&P 500 .
So for example, an index fund might track the S&P 500 index.
Because I ended up getting a deal-- long story short is this company has an index like the S&P 500 index but it really measures the whole market.