Beat the Market? There’s Only One Way to Do It

If you look at the stock market over the last dozen years or so, you really would not have done that well owning any of the major indices. The S&P 500 is trading at the same level it was back in 1999, so the notion of buy and hold in the stock market didn’t prove itself during this time period. There are two keys to success in the stock market: timing and dividends. During the 1980s and ’90s, owning the S&P 500 was a hugely profitable endeavor; during the 2000s, it was not. If you break it down and look at individual stocks, timing (buying goods assets when prices are down) and dividends are the essential factors in wealth creation. Consider a company like PepsiCo, Inc. (NYSE/PEP). If you pull up a very long-term chart on the company, you’ll notice that it has gone up a lot in value over time. But by time, I mean a long period of time. And for much of its history on the sto...