The weekly digest — 06.11.24

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 just received our dividend from BNY Mellon (widely known as the Bank of New York Mellon). BNY Mellon is as old and blue-chip as banks come; its origins date back to 1784 when it was originally founded as the Bank of New York by Alexander Hamilton (yes, that Alexander Hamilton). Today, BNY Mellon is the largest of a handful of so-called ‘custody’ banks. Unlike regular banks, which take deposits and make loans, custody banks hold and protect assets for large corporations, institutions and major asset managers, earning fees for safeguarding and servicing those assets via accounting, clearing and securities lending. That BNY Mellon has more than $52 trillion in fee-earning assets further fortifies the institution’s pedigree and position, with few viable alternatives for clients to migrate their assets. The result? It has upheld an excellent 14-year record of consistent dividend increases, and counting.

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.