Gary Shilling explains the only way to beat the market and win
Video Overview & Insights
Financial analyst Gary Shilling reveals the lessons he has learned about the economy and markets, how to stay ahead, and why everybody can't win. Following is a transcript of the video.
What did he say exactly. What was the value in this video?
Gary Shilling: Well, I've learned a lot of lessons over the years, and most of them the hard way. But, there are a couple of basic facts.
If you look at the economy, it grows over time. Not at a steady rate, but it grows over time. And markets, particularly the stock market, reflects that. In other words, if you have the economy growing at, let's say the nominal economy, nominal GDP growing at 4%. Long-term, corporate profits are going to grow about the same rate.
Just invest and DCA into SPMO @ 70% and VO @ 30%......
Obviously, they can't continually expand faster than the economy or decline relative to the economy. So, that's where you start.
So, in terms of stocks, the only real difference between how the nominal economy is going, and how the stock market is going, is price-to-earnings ratios, and they move in long cycles. 10, 15 years, they move up, then they'll tend to move down. And that's pretty much it.
The absolute platin standard for annual returns is, since its inception in 1985 (125 points), the Nasdaq 100. My "vomiting low" theory says the lows of october 2002, around 800 points, were the fair value in early 2000 instead of the grotesque internet bubble high of around 4,500 points back then.
This means a long-term, amazing return of around 13% incl. dividends a year by simply saving with a monthly rate into a lowcost index fund is the way to go. Time in the market beats market timing. The nasty downswings like in 2008 can't be forecasted, sadly.
For all of you who read this - an annual return of 20%, over decades, is total elite level. Only very, very few investors will be able to achieve this through active management.
Now, that's the overall economy and that's the overall investment.
Of course, everybody thinks they're going to beat this, there's that great gambling instinct in all of us. That's why people watch financial news programs. That's why they're watching us. Everybody's trying to get a leg up here.
It’s easy to fool people that want to be fooled.
Well, of course everybody can't win at this game, I mean, on average, it's going to average out. There is that hope that springs eternal within the human breast, as somebody once said, that you're going to be ahead of the game.
Now, what that means is, if you are trying to beat the game, you've got to be against the consensus. It doesn't mean that you simply are a contrarian in a sense of, "whatever the consensus is, I'm going to take the opposite side." No, no. 'Cause there's times the consensus can be right, and often is.
You can't beat the market. It will take your money.
But, what it means is that, when you come up with an idea, and it is counter to the consensus, and you think it's got a good chance of happening, and it's a trend that's working, well, then that's where you want to really jump on it with all force.
That's what we did in the early 2000s. We saw as early as 2002, what looked like a developing housing bubble. And, so we said, "This isn't ready to crack yet, but it looks like it's getting there."
Can China buy the entire Walmart Company? I see that's what is going to be the future because you can buy everything online from Amazon cheaper than at the Walmart store. Walmart will have to franchise its stores but then this will eventually fail as China can destroy that business model too. They only way Walmart can survive is if China buys it and imports goods so cheap and does online delivery beating out Amazon. Seems like the future of America is looking worse every year. Trump has created a disaster.
You had people who were putting nothing down on houses, they assumed that the appreciation would be such they'd never even have to make one monthly payment, because they could refinance, you had the no-doc loans, all this nonsense.
It really was clear.
I don't care about beating the mrkt. Give me the S&P index now and I'll check back in 30 yrs time. I'll take that
Now obviously that bubble would not have been developed and not broken 'til really the end of 2007, unless everybody, or most people, were convinced it was going to last forever.
So, there's a case of where you had an extreme situation, it was against all reality in terms of how long it could last, and it was one of these rare opportunities where going against the trend with a major bubble having developed, where you could make some serious money.
Buy low and wait long enough to sell high. The thing is you have to wait for the seed to bloom
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incorrect. The only way to beat the market is to buy low and sell high. any other way is just a gamble...
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Seriously
The core distinction between GDP and the S&P 500 lies in selection bias and structural evolution. While an aggregate economic growth rate (e.g., 4%) reflects the total output of all entities—including stagnant and failing businesses—equity indices like the S&P 500 represent a curated elite. The index outperforms the broader economy through three primary mechanisms: Survivor Bias: Unlike the general economy, which must carry the weight of underperforming sectors, the S&P 500 is a "success-only" club. It aggregates the winners while ignoring the friction of the losers. Semi-Annual Reconstitution: The index effectively "self-cleans" every six months. By rotating out decaying companies and replacing them with high-growth leaders, the S&P 500 maintains a structural momentum that the broader GDP cannot replicate. Global Scalability: The largest 500 companies are not tethered solely to domestic growth; they capture international market share and leverage economies of scale that far exceed the capabilities of the average local business.Bottom Line: The S&P 500 is not a mirror of the economy; it is a filtered performance vehicle designed to capture the ceiling of corporate growth rather than the floor of the aggregate market.
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this guy is such a Shill....
ing.
More User Perspectives
gary is a clown
@exposedthatThe way to beat the market is to invest in the right sector. The last 10 years, Information Technology sector has been the best performer, with some analyses showing annual returns over 23% and total 10-year returns for tech-focused indices exceeding 300%. Last 20 years was Information Technology as well.
@bobbray9666So… hindsight is 20/20
@robkelly8398🎉🎉🎉🎉🎉
@webfirmframeworkWho the hell wants to beat the market? The market has been doing great for decades.. Just buy ETF on USA or the world, and just sit there and wait. You will get enough just by doing that, don't get greedy..
@jz9289He didn't really say anything at all
@theworldsgreatestnihilistGetting into the market >and trading sounded simple at first, but once I got in, the price swings and mixed information made everything more confusing. I’ve tested several strategies,_ yet the results are just not there. Seeing others move ahead while I struggle has been frustrating. Has anyone actually worked with someone who guides you step by step instead of recycled content? I need real guidance...
@SamMacBainas of the last 30 years the Republicans leave office with the economy in the dumpster and the Democrats rebuild it over the course of 4 or 8 years and the process starts over again. Americans are too stupid to understand this it will never end
@stevenbates388Has this old boy beat anything in his life? Really? And if the answer is maybe, then why he is not on Bali relaxing, instead of propagating the nonsense on cheap cheap cheap YouTube
@NoExeetIs trading with leverage a scam? From experience and research, brokers conceal risks that can lead to big losses. E.g. the ‘B-Book’ (market maker) model, where the broker takes the opposite side of your trade, meaning they profit directly when you lose money.
Also - Trading with leverage is considered by many to be designed for retail traders to lose, often described as a "scam" or a "time bomb" because the high-stakes environment is engineered to favor brokers and exchanges.
KILLED BITTU KUMAR DIES YES
@AIANDROBOTICS-l4hThat didn’t explain jack shit
@josephguzzi1107you gotta be me 😏😂
@JohnWīìCK0It’s easy to collect strategies; it’s harder to apply them consistently.>> After testing multiple approaches without stable results, I’m wondering if anyone has experience learning directly from a mentor who prioritizes who focuses on the process instead of pre recorded content?
🔜
No idea what the hell he just said. And enhlish is my first language also.
@RobertGarcia-i5tBuy GOLD and real estate...done
@John-xeyvfkwiebasheet... wait 10 years to make money after market reverse
@cemalbalckblack4488Is call monopoly those who have access to the data and understand how the system works “CHEATING” take advantage of the others is that simple
@kalevra6999This guy didn't give me the way to make money
@dibuzeta8673Best way is to become expert at studying and analyzing price charts. Eventually you understand more about market psychology. Many say that so-called "technical analysis" doesn't work, but those are the people who haven't studied very hard. This has made me wealthy.
@KpxUrz5745If you deposited $20, made $120, withdrawn $50 or $199, you made a lot of money.
Chech if you can do it again, but this time, check if you can last longer.
After the 2nd trial, if you lost $20, and deposited another $20, and placed your positions carefully after analysis and calculations, and made more.
Then you need to be careful at this point, because platform operators will drag you unfavourably and make you lose.
This is done automatically, without emotions.
If you made money then third time, pause, give the market a break from you, analyse it and do your calculations, we can teach you how. If you entered and made money, and your gains stagger between $5 to $20, then calculate your MA of earnings and the right leverage and keep that matching to only once or twice per day.
Meanwhile, keep your job.
The first rule you should follow is not to trust any platform, because if you lose you will never get back anything.
DO NOT TRUST TRADING PLATFORM WITH MORE TGAN $20. ANY LARGET AMOUNT, YOU NEED TO ORDER DIRECTLY FROM THE COMPANY WHO'S SHARED YIU ARE BUYING AND DECIDED TO TRADE WITH THEM.
When you decide to trade, you need to analyse the market well ahead of your entry.
You need to check whether it is wise to deposit money and start, say to yourself, will this be a good decision?
Will I last the fluctuations?
Will I be able to make anything in the short term and how much.
Will I lose everything in the short term, and how much?
If you enter the market with funding, thinking that you will double it in the short term, then do not enter, because you will lose it all and sit in your underpants unwilling to even go to the bathroom.
Thinking technically, the bases of any investment is profit = revenue - expenses.
To put is simply, how much will it cost you to make any money?
The best way to beat the market is to stop thinking that you are in the market to control it.
Because no matter how big or small your investment is, the market can absorb your amount.
Simply trying to beat the market, this means you are not thinking of yourself, what works for you.
Instead, think of what works for you, otherwise, you will be gambling, losing more than you are winning.
The stock market is not a gambling game, you are there, spending a considerable amount of time and effort, and money to make money.
So, always think that you will lose, and with that in mind, think of how much you can make and retrieve.
If you keep depositing without realising much in return, then you are fooling yourself.
1- gage how much you can lose
2- gage how much you can retrieve
3- check whether it is sustainable for you to trade, given the amount you invest.
4- check the volatility rating.
This is because volatility can work against you. Meaning, that you will place a position, in the right motion, the right amount, the right time and you have taken the right decision. But unfortunately, a large percentage of time, operators of the platform will wait until you place. Position, lock the price, change the flow by manipulating the thresholds, making your price inferior, and giving away to their target or an investor's fund, because they can make more money between them, and you can take it as an opportunity to learn this fact.
It’s easy to collect strategies; it’s harder to apply them consistently. After testing multiple approaches without stable results, I’m wondering if anyone has experience learning directly from a mentor who prioritizes focusing on the process instead of pre-recorded content?
@HarveyWatson-m5nYeah, not valid
@tomaszjakubowski374This was very informative, appreciate it.
@JameselijwyihbsJameselijahhenrI've got a unique method that's WORKED TWICE so far, where I can actually pick booming stocks like a month or 2 BEFORE they start to take off. I can also pick a flop CEO in penny stocks versus one who'll be successful, usually by watching an interview or 2. The power of being a neurodivergent. You see what others can't by looking for what others don't.
@OffGridInvestorI’ve been hearing a lot about Expert Ann lately, especially with Bitcoin going through a dip. After taking time to look into her work, her method seems well-organized and centered on strategy rather than hype.
@Morgan-c6mWhat does a pro baseball player know about the stock market??
@Highlander_TXMoney laundering! this is why so many complicated and opaque financial instruments are still not banned.
@RandomPerson-w5vBitcoin & smarter web company. Fits this profile completely
@mattoshi21I think it's pretty easy to beat the market and harder not to beat your meat ?
@stepper1618lol
@Jaycee3I've been to the market for 3 years, this year sensex performed around 10% but my stocks performed 49% and I ain't a long term investor but I know when to short
@sahilfiroz8343I’m in my early 50s and plan on holding everything I have through retirement. For that reason I’m not too concerned about >this concentration at the top since. After testing different approaches without stable results, I’m wondering if anyone has experience learning from a hands-on mentor who focuses on the process rather than pre-recorded content.
@BenStevens-j4lWhat about the global debt of $370 TRILLION Dollars?!?!??!?!?!?!?
@ucanon2662I don't know this guy, but what he says is pretty stupid. The 4% growth rate for the overall economy is because the vast majority of people do nothing to increase the economy. You have to look at what the top .01% incomes are increasing, to see what the stock market can do. You're not investing in Joe blow. You're investing in Elon Musk, Jeff Bazos, Mark Zuckerberg, Sergi Brim, Larry Page, Jensen Huang etc. I've had an average annual return of 32% in the last 10 years, mainly because of Nvidia. I think 10% is a reasonable rate of return in the stock market. The guy that said 95% of people lose money is stupid.
@jeffanderson963NOW I've hit $170,590. I was having this exact conversation with my son the other night-generational wealth isn't just about getting money. It's about teaching everyone not only how to make it, but also how to maintain it. It does no good for me to provide for my family if they don't understand how to manage and sustain it...
@grace-e6y7w