Over the past decade Buffett has lagged the S&P 500 but over his career he's handily outperformed the S&P 500 with 17%+ compounded annual returns. The more assets you have under management the harder it becomes to outperform the SPY

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By no means am I here to pursued you to deviate from what makes you comfortable. But I’m living proof that the s&p can be out performed.

It is ESSENTIAL I compare percentages until I’m blue in the face because you must keep score. If anyone uses an advisor, I challenge you to demand their annualized rate of return versus the S&P 500. 99% chance they don’t track it and will reply with some nonsense as to why.

The traditional wisdom you mention is accurate regarding outperformance of the S&P but I ask you, compared to what? John Smith, individual investor? Or Mega Fund actively invested fund? The traditional wisdom is often comparing the S&P to the ladder. Actively managed funds charge a higher fee and therefore people demand ACTION for that fee. The ACTION the funds take is what kills their performance. My point is that you can concentrate your portfolio and do NOTHING and outperform the S&P by holding great companies, many of whom are listed on the S&P.

The argument is that the law of averages will return my peformanxe to that of the S&P, but this is why Its essential that track performance. If it ain’t working join the crowd and index, but given a 12 year collection of data I’m beginning to see the reality of out sized performance. It’s astounding what outperforming by 5-10% annualized does to a portfolio when you run hypotheticals on a calculator.

Just consider who is telling you that indexing is the only way (institutions, media) and if it’s an advisor demand their performance versus the S&P. And whatever you do, accept no less than the average, it can cost you millions in the long run!

Yes, those are absolute garbage! The problem is, everyone is always looking for the next Amazon at $1 when the best bet is just investing in Amazon. But people price anchor and say “I missed that one, too late”. I’m no exception to this but buying excellence and continuing to do so is where the real money is made!

Well said. For the portfolio/mutual fund/hedge fund manager managing hundreds of millions if not billions of dollars its difficult to outperform the SPY. However for the individual investor managing small funds it is significantly easier granted they have dedicated time learning different strategies and have picked one that fits their personality and temperament.

This is probably diving alittle deeper into the weeds than necessary but I think it needs to be discussed due to the focus by Index investors on the SPY as "the market". The SPY is only 1 of several "markets" that technically are called asset classes. Many use the SPY as a proxy for US Domestic equities Asset Class in a diversified portfolio including a strategic mix of other asset classes like Foreign Developed index, Emerging market index, US REITs(Real Estate) Index, Foreign REITs, Bond Index, and Commodities.

The goal of maintaining a diversified portfolio is its difficult to determine with consistency which of these markets will outperform as every 10 years or so there is a completely new performance leader. There are periods of over 10 years where REITs, Gold, Emerging markets, you name it has destroyed the SPY. While the SPY has had a spectacular run over the past decade, the expected returns over the next 10 years look bleak due to high valuations. I wouldn't expect more than 5% compounded annually returns for the SPY over the next 10 years. Foreign Developed and Foreign Emerging markets have much better valuations and therefore better expected returns of 7%+.

The US is a great country and still will be over the next decade but successful investing is not primarily about investing in the best companies but investing at the best prices/valuations. Google the "The Nifty 50" for a famous example about paying too much for great companies.



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What do you guys think is better for long-term growth and wealth building, real estate investing or stocks?

I'd say both are equal go with the one you are more passionate about.

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Simplistic answer but do both. I have been nicely pleased with my commercial real estate and very happy with my stock portfolio. I am a pilot not an expert in those endeavors. Becoming wealthy is 90% discipline with common sense and 10% luck. MHOO.

Well I am super disciplined. I buy my lottery ticket on the regular every week. Need that luck to kick in. I figure it’s a better investment than my 401K.

Excellent point. Personally while I'm not Jewish I do subscribe to the philosophy from the Talmud text of "Let every man divide his money into three parts, and invest a third in land, a third in business and a third let him keep by him in reserve."

So for me:

33% in emergency fund

33% in Real Estate (Syndications/Partnerships)

33% in Net Net and Deep Value Equities around the globe

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Side Hustle
 

I was just making an apples-to-apples comparison to the timeframe mispoken quoted. Nothing more. And I offered up $100K at 15% since he claimed his strategy would allow him to make a handy profit while still paying out to me. Why would I sell my money to him at 4-7% when the S&P is going to give me 10%?