As you know, this newsletter is not investment advice. It is independent research from a 25-year Wall Street veteran and former stock broker.
I was a licensed broker from 2002 to 2022. I started right after 9/11 and the internet bubble, and I learned the hard way, on the front lines of investing, trading and investing for high net worth clients. Those years taught me that knowing what not to do is 90% of the battle. A well thought out strategy, and the discipline to stick with it, is the other 10%.
My mission is to keep you in the know about what is really going on with the stock market, it’s best investments.
This is a special edition, one I have wanted to write for a long time……
THE LIES THEY SELL YOU ABOUT INVESTING
Most of what passes for “investing education” is a shit sandwich:The television wants your attention. The broker wants a ticket and some commish, The advisor wants a fee on assets that barely beat inflation. None of them get paid for telling you the quiet math. Here is the quiet math akathe truth.
The Average hedge fund returned an average of 5% a year from 2011-2020
- The people sold as the smartest money were not:From 2011 through 2020 the average hedge fund returned about 5% a year. The S&P 500 did about 14.4% a year over that same stretch. A hundred thousand dollars in the average fund grew to roughly $160,000. The same money in the plain index grew to about $365,000. Warren Buffett bet a million dollars on exactly this and won. Hedge funds only look clever in the years the market is already falling, and even then they usually just lose less. After the 2-and-20, the “best” often trail a fund you can buy for a few basis points.
- The loudest voice on television has a lousy audited record: A Wharton study of Jim Cramer’s Action Alerts PLUS portfolio from 2001 to 2017 put the annualized return near 4.1% against roughly 7% for the S&P 500, with more volatility and a worse Sharpe ratio. He beat the index in about 7 of 20 years. Later work on thousands of Mad Money calls found the casual buy recommendations, especially in small caps, lagged badly. Fame is not a process.
- A five-dollar stock can be far more expensive than a hundred-dollar stock. Price is what you pay:Value is what you get. A $5 name at 80 times earnings, burning cash, with a $40 billion market cap is expensive. A $500 name at 12 times free cash flow, growing, with a real moat, can be cheap. The quote on the screen is a share count trick. Market cap, cash flow, and the multiple are the bill.
- Almost all the money is made in a handful of Stocks in a managed account.Hendrik Bessembinder’s century of U.S. stock data is brutal. Of roughly 30,000 stocks from 1926 to 2025, the median buy-and-hold return was negative. Fewer than half made money at all. About 41% beat Treasury bills. Just 46 companies created half of all the wealth. The market’s long-run return is not “stocks in general.” It is a few DOMINANT PLAYERS carrying a graveyard of the rest.
- You already watched that happen in real time, and they still will not say it plain. First it was FANG. Then FAANG. Then the Magnificent 7: Same movie, new poster. Since 2010 the platform and chip compounders — Apple, Amazon, Google, Meta, Netflix, Microsoft, Nvidia, Tesla — did not “keep up” with the S&P 500. They lapped it. An equal-weight FAANG book has annualized near 26% over the last decade while the S&P 500 did about 13.5%. In 2023 the Mag 7 accounted for about 62% of the S&P 500’s return. In 2024 they accounted for about 53%. Strip the mega-caps out of a hot year like 2020 and an 18% index year collapses toward a low-single-digit year. The index was the trailer. The few names were the film.
Here is the part that hurts:Wall Street doesn't tell investors the truth because there is no money in the truth!_You did not need a hedge fund with a 20% carried interest or a wrap account with a 1% “strategic allocation” to own the businesses that actually made money._You needed to know which companies were the best and you needed the nerve to hold them. That is the whole edge . That is where Coach Kyle and G.L.A. INVE$T come in.I built this service to give retail investors a product and service that they actually needed, a source of independent research and insights of someone who has been on the front lines of investing for over 25 years.
_DIVERSIFICATION Can Often Mean “DIWORSIFACTION”_Buffett said diversification, as it is usually practiced, “makes very little sense for anyone that knows what they’re doing,” and that “diversification is a protection against ignorance. _Charlie Munger,_his longtime partner, put it harder: “Diversification is for those who don’t know anything. It exists so you do not have to know what you own. If you have not done the work, own the index and stop pretending. _If you have done the work, a more concentrated portfolio of businesses with moats will beat a closet of 60 names you cannot explain._The graveyard is real. Concentration without a process is how people go broke. Concentration with a process is how the scoreboard gets built. FANG, FAANG, and the Mag 7 were that process, hiding in plain sight.
- The market lives near the highs. Since 1950 the S&P 500 has hit a new all-time high on roughly 7% to 8% of all trading days, about 20 times a year, clustered in bull markets.New highs are the normal behavior of an asset that compounds, not a sell signal. Buying on a day the index closed at a high has historically produced better one-year returns than buying on a random day. The scary headline is the exception. The base rate is that the market spends most of its life within a routine pullback of the high, not in a crash. Corrections happen. The people who treat every high as a top donate their shares to the people who do not.
- _Bonds are not safety. They are a slower leak._A bond pays you a fixed coupon while inflation, taxes, and opportunity cost eat the real return. The 2022 rate shock showed the other side: long duration can drop like a stock and still not recover like a stock. Over a 20- or 30-year wealth window, a portfolio stuffed with bonds has historically been a decision to own less of the compounding engine. Bonds have a job for someone who needs the cash on a date. They are a poor job for someone trying to build generational capital.
- _Cash is not a position. It is a melting ice cube. At 3% inflation, purchasing power is cut in half in about 24 years._At the inflation we actually lived through after 2021, it melted faster. The nominal balance in the account never falls, which is why it feels safe. The groceries, the rent, and the share of a great business you can no longer afford tell the truth. Cash is a tool for dry powder and bills due inside a year or two. As a long-term store of wealth, cash can lose purchasing power when inflation exceeds its after-tax return.
- The last two are wallstreets dirty ssecret:The finance media is not your friend, It is an ad networkwhere it leads if it bleeds and a place where financial professionals talk shop, they are not talking about what retail investors should be doing.This goes for the articles in the wall st journal to the conversations on Squawk Box on Cnbc.
- _Your stockbroker or investment advisor is not your partner_A broker only gets paid when he moves money or trades for you. Which eventually ends up as gambling. Your financial advisor is not automatically your ally either. A 1% assets-under-management fee sounds small.Over 30 years it can consume roughly a quarter of the ending wealth, and that is before the funds inside the account charge their own fees. Think about a 5 million dollar account or IRA, 1% of 5 Million is 50 thousand per year, times ten years gives us 500k in fee’s given to the advisor. Now ask yourself, what did he do to earn this??? Most managed accounts barely beat the S&P, most managed accounts are super over diversified and watered down. Yet they are taking investors to the bank – Investors could have literally bought and held FAANG and then the MAG 7 and they would of crushed most hedge funds and investment advisors (with no fees)
Three more they skip.
- Fees are a second manager working against you. A fund that lags by 1% a year does not lag by 1% of your life. It lags by the compound of that 1%. SPIVA’s scorecards keep showing the same thing: most active stock funds lose to their benchmark over 10 and 15 years, after fees.
- Missing the best days is how average investors turn a great market into a mediocre account.The biggest up days cluster near the biggest down days. The person who sells the scare and waits on the sidelines to “feel better” sells the recovery too. There are 10 random trading sessions per year that if you are not in the market your expected gains are cut in half. These big up days usually follow sharp declines. AGAIN Speaking for 25 years of experience, investing is not about timing the market its all about TIME IN THE MARKET.
- You cannot save your way to generational wealth on a salary alone, and you cannot trade your way there on tips. Ownership of scarce, cash-producing innovation, held through the noise, is the whole game. Price is a distraction. Process is the edge. Alignment is the filter. The Mag 7 proved the process in public. The fee proved who was never on your side.
THE MYTH LIST
1. Myth:Hedge funds are the smart money. Fact: From 2011–2020 the average hedge fund did about 5% a year. The S&P 500 did about 14%.
2. Myth:The guy on TV with the buttons must be good. Fact: Cramer’s audited charitable portfolio annualized near 4% from 2001–2017 while the index did about 7%, with more risk.
3. Myth:A low share price means a cheap stock. Fact: A $5 stock can be wildly more expensive than a $500 stock. Price is not valuation.
4. Myth: A diversified portfolio means every holding pulls its weight. Fact: A few companies create most of the wealth. The median stock loses money.
5. Myth: More names always means smarter. Fact: Diversification is what you do when you do not know what you own. Know, or own the index.
6. Myth:All-time highs are a warning. Fact: New highs are normal, roughly 20 times a year since 1950, and buying at highs has historically still worked.
7. Myth:Bonds are the safe grown-up allocation. Fact: After inflation, taxes, and opportunity cost, bonds are a drag on a long wealth window.
8. Myth:Cash in the bank is saving. Fact: Cash loses purchasing power every year inflation runs. The balance lies. The grocery bill does not.
9. Myth:The media, the broker, and the advisor are on your side. Fact: They are paid for clicks, trades, and fees. You are paid only if the capital compounds.
10. Myth: A 1% fee is small. Fact: Over decades that fee can eat about a quarter of terminal wealth.
11. Myth:Most professionals beat the market. Fact: Most active funds lose to the benchmark after fees over 10 and 15 years.
12. Myth:Getting out and getting back in is risk management. Fact: The best days sit next to the worst days. Missing them is how investors underperform their own funds.
13. Myth:You need a product to own the winners. Fact: FANG, then FAANG, then the Mag 7 beat the S&P 500 since 2010, and there is no fee in that truth. That is the lane for Coach Kyle and G.L.A. INVE$T.
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