THIS WEEK’S FOCUS

Beating the Market: Possible or Just a Fantasy?

Everyone wants to beat the market. Whether you’re investing for financial freedom, early retirement, or just to flex on your friends, outperforming the S&P 500 is the ultimate goal.

But here’s the reality check: most investors fail. Even professional fund managers, armed with research teams and billions in assets, often can’t consistently outperform a simple index fund.

So, is it even worth trying? And if so, what’s the right way to do it? Let’s break it down.

INVEST WITH THE INSIDERS

🌟 What If You Could Trade Like a Tech Executive?

When corporate insiders—CEOs, CFOs, and senior executives—buy or sell their company’s stock, they aren’t making random bets. They have deep knowledge of company performance, upcoming product launches, and strategic shifts.

Surmount’s FAANG Insider Trading Strategy is designed to capitalize on this advantage. By tracking publicly disclosed insider transactions in Meta (Facebook), Apple, Amazon, Netflix, and Google (Alphabet), this strategy helps investors follow the smart money—automatically adjusting based on real insider activity.

Why This Strategy Works

1. Insiders Know Their Companies Better Than Anyone

Insider buying is often a strong signal of confidence in a company’s future. While executives sell stock for many reasons (tax planning, diversification), large, unscheduled insider purchases are harder to ignore. These trades suggest insiders see value and expect growth.

2. FAANG Stocks Are Market Leaders

For over a decade, FAANG stocks have driven market gains. Despite occasional volatility, they’ve remained dominant forces in technology, communication, and e-commerce. Instead of chasing the latest speculative stock, this strategy focuses on companies with real earnings power and long-term growth potential.

3. Automated Execution Eliminates Guesswork

Manually tracking insider trades, filtering meaningful transactions, and timing the market is difficult. This strategy removes the complexity by automatically:

• Identifying relevant insider trades (excluding routine sales).

• Adjusting positions based on conviction levels (buying when insiders buy, reducing exposure when they sell).

• Managing risk dynamically to limit downside exposure.

How This Strategy Has Performed

• 150.22% all-time return, compared to the S&P 500’s 82.87%.

• Annualized return: 20.37%, nearly double the long-term average of the S&P 500.

• Trades per day: 2.27, ensuring timely adjustments based on new insider data.

Risk and Drawdown Management

• Calmar Ratio: 0.55 – A favorable balance of return vs. downside risk.

• Recovery strength: The strategy rebounded after a 31% drawdown in 2022, finishing with a 49% gain in 2024.

How our Strategy Works

1. Tracks Insider Trading Reports

   • Publicly reported insider transactions are monitored across FAANG companies.

   • The strategy filters high-conviction buys from executives.

2. Filters Out Routine Sales

   • Scheduled stock sales (common for tax or compensation purposes) are ignored.

   • Focus is placed on unscheduled, high-volume insider buys, which signal long-term confidence.

3. Adapts Portfolio in Real-Time

   • If key insiders are buying heavily, the strategy increases exposure.

   • If insiders are selling significantly, positions are reduced or exited.

Instead of guessing which tech stocks will perform best, follow the executives who shape the industry.

Surmount’s FAANG Insider Trading Strategy allows you to automate your portfolio with real insider intelligence, adapting to market conditions without the emotional biases of retail trading.

EVEN THE ‘PROS’ STRUGGLE

Why Most Investors Underperform the Market

The S&P 500 has historically returned around 10.5% annually, meaning your money doubles roughly every 7 years without you doing anything. Sounds great, right?

Yet, despite this, most actively managed funds underperform over the long run:

• 85% of actively managed large-cap funds underperform the S&P 500 over 10 years.

• Over 20 years, nearly 95% of them underperform.

Why does this happen?

1. Fees eat into returns. Many active funds charge 1-2% annually in management fees. Over time, this compounds into significant losses compared to a low-cost index fund.

2. Markets are brutally efficient. By the time you hear about a “hot stock” on CNBC or Reddit, it’s too late—new information is instantly priced in, making it nearly impossible to gain an edge.

3. Human emotions ruin performance. Investors panic during downturns and FOMO into hype stocks at the top. Data shows that the average investor underperforms even their own funds due to emotional buying and selling.

So if professional managers can’t consistently outperform, what chance does the average retail investor have?

Surprisingly, some strategies do work—but they require discipline, data, and a systematic approach.

THE BEST APPROACH

Passive vs. Active: What Actually Wins?

If your goal is steady, long-term growth, index funds are tough to beat.

• The S&P 500 has averaged ~10% annually over the last century.

• It’s simple: Buy, hold, and let compounding do the work.

• Costs are low: Many index funds have expense ratios under 0.1% (compared to 1-2% for active funds).

Even Warren Buffett has said that most investors should just stick to index funds. In fact, he bet $1 million that a low-cost S&P 500 fund would outperform a hedge fund over 10 years—and he won.

But what if you want to aim for higher returns? That’s where intelligent active investing comes in.

FORGET STOCK-PICKING BASED ON HYPE

How Some Investors Actually Beat the Market

The investors and funds that do outperform the market follow structured, data-driven strategies—not emotional stock-picking.

Factor Investing (Smart Beta Strategies)

Academic research has identified repeatable factors that have historically outperformed broad indexes. The most well-known include:

• Momentum – Stocks that have outperformed recently tend to continue rising.

• Value – Undervalued stocks (low P/E, P/B) have historically outperformed long-term.

• Small-Cap Premium – Smaller stocks tend to have higher growth potential than large caps.

• Low Volatility – Less volatile stocks often deliver higher risk-adjusted returns.

Factor investing isn’t about guessing trends—it’s about systematically tilting your portfolio toward historically strong drivers of returns.

Quantitative & Systematic Strategies

Instead of relying on “gut feelings” or news headlines, quantitative strategies use data to drive decisions. Hedge funds and top-performing investors use systematic rules to find opportunities, such as:

• Trend Following – Buying assets that are in strong uptrends and exiting when momentum weakens.

• Mean Reversion – Taking advantage of short-term price reversals when stocks become overbought or oversold.

• Multi-Factor Models – Combining different factors (momentum, value, volatility) to build resilient portfolios.

The key? Strict rules and discipline. Many investors fail because they abandon their strategy at the first sign of volatility.

EMOTIONAL INVESTING IS OUT. AUTOMATED INVESTING IS IN.

Keep Calm and Automate

One of the biggest mistakes investors make during a recession? Freaking out and panic-selling when the market dips. Fear and greed are the ultimate portfolio killers.

The solution? Automate your investments.

Automated strategies—like the ones Surmount offers—take the emotions out of investing. Instead of guessing when to buy or sell, you rely on a system that follows pre-tested rules to manage your portfolio for you. It’s like having a personal financial coach who never panics or sleeps on the job.

For example, Surmount’s [insert strategy name] uses a blend of market trends and data-driven algorithms to rebalance your portfolio, ensuring you’re always optimizing for growth—even in volatile markets.

AUTOMATED, DATA DRIVEN INVESTING WITHOUT THE WALL ST FEES

How Surmount Helps You Invest Smarter

At Surmount, we take proven, institutional-grade investment strategies and make them accessible to everyday investors.

✔ Automated Smart Portfolios – Built using quantitative models designed to optimize returns.
✔ No Emotional Trading – Strategies execute automatically, removing human error.
✔ Institutional-Grade Investing – Access hedge-fund-level strategies without high fees or minimums.

Final Takeaway: What’s Your Best Move?

💡 The right strategy depends on your goals and risk tolerance.

• If you want consistent, long-term returns with minimal effort, index funds are a great choice.

• If you want a smarter, automated way to potentially beat the market, systematic investing strategies (like those at Surmount) are built for that.

• If you’re still picking stocks based on “hot tips” or Reddit posts… well, you’ve been warned.