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Buy S&P 500 & Take A Walk? | Truth Or Skepticism

Nov 6, 2015

By: Mike Butler

Tom & Dylan are back for another segment of Truth Or Skepticism! This week they discuss how active investors can make better returns than passive investors, even with the large swings in the market. Tom explains his position over the past few months, and how he was able to withstand the market's drastic swings. While passive investors are close to even on the year if they held the S&P, Tom is up much more. Check out this article for a sneak peek!

PASSIVE INVESTING IN S&P - YAY OR NAY?

How could you not want to improve your skill set?
— Tom Sosnoff

Tom & Dylan battle on the passive vs. active investing topic. Dylan explains how if someone was holding the S&P they would be back to even for the year, and Tom disputes the mindset of breaking even being a good thing.

OUTPERFORMING THE S&P

Passive investors will have a hard time outperforming active ones unless the market is very low IV and completely one sided.
— Tom Sosnoff

Tom explains exactly how he outperformed the S&P thus far, by being short volatility and having a net short delta overall. Dylan asks how much of his portfolio weighs towards being short volatility vs. short directionally, and Tom explains it’s close to 50/50.

RATE HIKE CHATTER - ANY MERIT?

Tom talks about how the rate hike chatter doesn’t phase him, and how he doesn’t follow what the fed does from a trading perspective. He uses bonds to alter his directionality. Dylan wonders what the play is if the market drops, and Tom explains why buying naked puts is not the answer.

FINANCIAL PRODUCTS

Passive investing has killed our will to learn.
— Tom Sosnoff
Between buying the S&P and taking a walk, and active investing with tastytrade, there is a steaming pile of active funds that have extremely high fees and perform poorly.
— Dylan Ratigan

Dylan & Tom have a great discussion regarding the profitability of brokerage firms. Dylan feels a brokerage would want an investor to become active so they can benefit from additional commissions, but Tom feels otherwise. He argues that is a small portion of their revenue stream.

Remember, this is just a preview - check out the full segment below!



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