The weekly digest — 01.01.25

A Winning Machine

What is more powerful than a 101-year-old winning machine? Since 1923, the S&P500 index has generated an annualised return of ~10.5%. For more than a century, it has:

• Beaten 99.9% of professional investors, who typically underperform the index annually by ~2-3%, with the gap widening dismally over time.

• Proven its stellar compounding potential; $1 invested in the index in 1923 would be worth more than $13,000 today.

• Comprised of the bluest of the world’s blue-chip stocks, self-regulating and re-weighting these in line with their individual performances — eliminating user selection error.

• Always regained its previous highs, surviving the Great Depression, one World War and the Covid pandemic.

Weekly Digest

On a look-through basis, we became entitled to CME’s (Chicago Mercantile Exchange) annual variable dividend — this time in the hefty amount of $2.1 billion — last week. Since inception in 1898 and until its 2002 IPO, CME has been member-owned. The company began its regular dividend pathway in 2004 and added its annual variable dividend in 2012, paying more than $28 billion in dividends cumulatively since. What does this mean for CME’s original investors? While they still own their shares and receive ongoing and increasing dividends, these early investors have already received dividend payments in excess of what they paid for their CME shares. Plus, it bodes especially well that, as the world’s foremost derivatives exchange, global traders are drawn to CME since they can trade in bigger volumes without disrupting prices — a dynamic which can’t be matched elsewhere. This competitive edge has proven both significant and enduring, precipitating a likely extension of CME’s stellar 20-year-plus dividend growth record.

To Have and To Hold

The greatest threat to our investment success? Us. So, how do we get ourselves from outset to outcome? Over four years, we’ve collected more than four million data points that demonstrate how a particular methodological communication keeps investors on track. This email is part of a powerful anticipatory feedback loop that works as a bad-decision buffer. With our handholding, evidence shows investors are far more likely to hold onto their investments — long enough to enjoy their wins.