We were talking about stocks and stock funds that were conservative. The discussion was how you could conservatively make 10%, and I gave an example of how to do it with stocks/funds. The discussion was on conservative stocks/funds.
And most lose to the S&P over any length of time.
This might be where I think we disagree. Even in your example I think it's totally off base. The way I see your example is "saying that you are overpaid because you make more then the average salary of someone in your field". The S&P500 is the stock worlds benchmark of how the market is doing. Notice that the S&P500 is always presented to you when someone is talking about how the market did on a certain day.
American Funds. Kickback = money that isn't a commision.
Last 3 years
Ten year average +9%. And it's up 9% in the last 12 months.
Maybe you should take a look at that, no where near a 6 or 7 year losing streak. Granted there where 3 years in the last 10 that it was down, but there where 5 that it was up between 20 and 33%.
If there is any stock/fund that won't lose money if the S&P loses 40% in a year, please show me.
Except that by throwing in hedging, you would extremely reduce the beta of the S&P500. You can't hedge, at least a 'normal' investor can't, an American Funds fund. And the point of this whole thing was to show how using a broad index and hedging (covered calls) can give you a conservative investment with good returns. Heck a covered call that is still out of the money by 1.5% can net you 1.5% when the stike date is less then a month away. So you have downside protection of 1.5% for the month.
I am enjoying this converstation, maybe there's a better forum though?