[On The Smart Investor] Forget the S&P 500 ETF: These 3 US Stocks Gave Better Returns

The S&P 500 ETF (NYSE: SPY) has provided good returns in recent time. If you have invested in the ETF on the first trading day of 2019, you will have obtained a total of 93% return by the end of 2023.

However, there are stocks that have outperformed the index and I am not talking about the Magnificent 7 stocks.

In the following article that I wrote, I shared three counters that managed to beat SPY over the past five years.

You might argue that you are happy with the SPY’s return.

To be honest, I would be too.

However, I still prefer to pick stocks and here’s why.

The “Lost Decade”

There were periods in the past where the index has gone no where over a long period of time. In this October 2022 Business Times article, they shared two periods of “lost decades” in the US market – the first around 1970s and the other around 2000s.

There were companies that did well during the “lost decade”!

I picked up a few of them and interestingly, Tractor Supply, which I featured in the above article was a big winner during that period!

My conviction comes from knowing the business and management

There will be bear markets and market will drop by more than 20%.

It happened before and it will happen again.

Fear will arise during such periods and our conviction of our investment will be challenged.

Personally, knowing the underlying businesses and how the management typically deal with challenges provide me with the conviction to hold on to my investment. I might also make use of such situations to tune my portfolio.

It is a lot harder for me to manage my emotion if my whole portfolio is invested in ETF. I will probably feel a lot more uncertain about the eventual recovery.

It’s just so much more fun investing in individual businesses

I probably mention this before. I do not invest simply for the money.

Investing in individual businesses provides an avenue to satisfy my curiosity to what is happening in this world.

I also derive satisfaction from knowing that the businesses I invested in are able to provide for societal needs.

Hence, I will continue to pick stocks since it can give me both monetary and non-monetary rewards.

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