Yes -- especially because just about every diversification strategy being promoted over the past 20 years involves putting money into other asset classes that have under-performed the S&P by large amounts. And the arguments for diversification are everywhere. Hard to ignore them.
Wealthfront, for example, currently cites a 3-year annualized return of 5.67% on its best batch of portfolios (ie tax-advantaged), and a 5-year annualized return of 9.44%.
By contrast, a pure S&P play would have provided 10.09% annualized over 3 years and 15.17% over five. Links are here:
I don't believe BillG had all his money in S&P index funds. But he and/or his managers were able to find other investments that did even better. That's not easy to do, given markets of recent years, as the Wealthfront data indicates.
About one third of managers beat the market. The problem is that there is no correlation between year-to-year performance of managers: the manager who beat the market this year is no more likely to beat it next year than any other manager.
It occurs to me that maybe the way to beat the S&P is to focus on the losers and not the winners.
That is, if you could figure out which listed companies were going to fare the worst and build a partial index fund with the rest, you'd beat the index.
Similar research style to short selling but with less downside.
In order to beat the market, you have to know something it doesn't already know. But eventually, it's (they're) going to learn that, too, so you'll have to learn something new. The only way to keep beating the market is to gather information faster than the "average" and keep up with the information that it has, relative to what you invest in, although usually you can accomplish most of the work in the latter half (beta, IIRC) by watching the market itself. In brief, as Martin Shkreli put it: invest in yourself...
Unexpected takeovers make this much harder than it seems.
For example, Twitter's prospects on its own don't look so great right now. But if that induces you to avoid owning Twitter, you miss out on a quick profit (perhaps even a big one!) if some larger company decides to buy it.
I don't think it's any easier to find companies that will under preform. Apple stock seems over priced right now with P/E:17.66 and not so great growth prospects, but so does Amazon and Facebook and the rest of the S&P 500 when you take a close look.
I wasn't able to find actual data on his performance, what I found is that: "Cascade does not publicly disclose its performance results". If someone has actual numbers I'd be happy to see them.
By managers I mean professional portfolio managers.
Individual investors pretty much all do worse than market.
EDIT: obviously that means there is skill involved. But it seems that professional managers are close enough in skill that luck is the dominant factor.
