Great Question

Do you think it is possible to beat the s and p average over a 15 year or twenty period, given the law of reversion to the mean and the length of time?
This is a great question. There is yes, a no and an it doesn't matter answer to this question and all three are valid.

There are a few, very few, people that have beat the market for 20 years, Warren Buffet comes to mind as one. As I write this I can't think of another but there are clearly some. So where there is one than can be another. As shallow as that reads, that's about all I think about trying to beat the market year in and year out.

I would be happy to lag by 200 basis points the next time the market is 25%.

There is one way to beat the market over a lengthy time period without a lot of stock picking smarts. Have a clear and simple exit strategy (longtime readers know my exit strategy involves the S+P 500's 200 DMA) to help you miss a big chunk of down a lot. We will have few down 20% years over the next two or three decades. Missing a big chunk of just one of them will likely mean you outperform for a long time. Remember the market averages 10% by being up a lot, up a little, down a little or down a lot. Staying close except for one down a lot and you have chance for long term outperformance.

My no part of this is that so few people have done it that it is an incredibly big mountain to climb. Very few people (pros and do-it-yourselfers) can see the big enough picture to realize the above paragraph might be the most important thing for a successful portfolio.

My goal this year, as it is most years, is to stay close. I've done a little better than that this year. One year, maybe next year or maybe the year after, I might get challenged by a client who cannot buy into the goal of staying close most of the time in a year where I do lag.

My it doesn't matter answer has to do with how the market works. The US market has an up year 72% of the time. The number of trades you place or the amount you worry about your portfolio won't change that. Nor is it likely that 10% as an average annual return will change much long term (over a few years maybe). If 8%-10% doesn't get you where you need to be you need to save more not invest better.

Of all of this I think the idea of staying close most of the time and missing a big chunk of one down a lot in our lifetime is the most important thing and I think it is doable. This will probably do little for anyone's ego but ego should not be driving the bus here.