The Unluckiest Quality Individual Stock Investor versus Quality Index Investing

Abstract

This paper will compare the results of two individuals investing $125,000 each in the stock market over a 15-year period. One invests the entire $125,000 as an initial lump sum into a market basket of stocks. The other initially invests only a portion of the $125,000 into a collection of randomly selected quality dividend paying stocks while investing the remaining portion into the same stocks on a quarterly basis over 15 years. This second investor unluckily always invests at the high points of the market. Both investors reinvest the dividends. The comparison of the two investment strategies is astonishing.