A wise man has repeatedly said that “buy and hold” is dead and that active investing is far better than passive investing, which we once again prove in this segment. Tom and Tony are here to convert any unbelievers.
The vast majority of so-called financial experts all repeat the same general theme that passive investing, essentially buy and hold, beats active investing. This leads many to question us why we insist that active investing is superior. This segment will, once again, prove why.
We believe in hard data so we did some backtesting. A table of our backtesting of three active strategies and one passive strategy from January 1 2000 to present was displayed. Strategy One was holding the S&P 500 while selling a 1 month at-the-money (ATM) call on SPX. Strategy Two was holding the S&P 500 while selling a 1 month 2% out-of-the-money (OTM) call on SPX. Strategy Three was holding T-Bills while selling a 1 month ATM put on SPX. The passive strategy was a hold on the S&P 500. The table showed the results of the worst month, best month and percentage of months with positive returns.
A second table of the three active strategies and one passive strategy from January 2000 to present was displayed. The table showed the year by year percentage returns on each strategy. A third table of the annual returns including dividends and without fees on each strategy since January 2000 was displayed. The table included the average return and standard deviation of risk on each. A graph of the high annual percentage return and low standard deviation on all four strategies was displayed. Ask the passive investing gurus to explain why we got these results.
Watch this segment of “Market Measures” with Tom Sosnoff and Tony Battista for the valuable takeaways and other important information comparing passive investing to active investing over the last 15 years and why it’s a “no brainer” to manage your own money.
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