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The recommendation of Warren Buffett?
Most investors are better off buying the S&P 500.
But not every company in the S&P 500 is a good investment.
Let’s teach you how you can share the good from the bad.
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Only a few stocks matter
The S&P 500 has delivered an average annual return of 10% over the long term:
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But you know what’s interesting?
Hendrick Bessembinder looked at nearly 100 years of stock returns.
Here’s what he found:
The average cumulative return was +22,840%
The median cumulative return was -7.41%
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How can this be?
Because a very small number of stocks generate almost all market returns:
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Buying a standard market-cap weighted index like the S&P 500 means you buy everything.
You get the highly profitable compounders, but you’re also buying the companies destroying capital.
As Quality Investors, we only want the best of the best.
What is quality?
You can define quality in several ways.
But there are a few general ideas that most of them have in common.