Imagine two investors who started in the exact same place: same income, same discipline, same habit of putting Christmas bonuses into their investment accounts.

Decades later, both retired. One had a portfolio big enough to live comfortably. The other had a portfolio big enough to fund companies, retire his family, and change his legacy.

The difference wasn’t luck, IQ, or starting capital. It was strategy.

Simply investing in the S&P 500 over the past 50 years would have gotten you a 10.33% return. But if you were the kind of person who was satisfied with stopping there, you likely wouldn’t be reading Stocks & Income. There’s nothing wrong with the S&P 500, but today, we are not here to talk about market average gains. What we’re talking about today is investing styles that can beat the market.

One of these strategies took a man’s portfolio from $20K to $60M. Another is what built Warren Buffett’s $148.2B net worth. And another enables you to trade exactly like them with no technical knowledge.

So without further ado, let’s talk about three strategies you can use in your everyday investing to potentially outrun the S&P 500.

Effort level: High

Though the term may seem intimidating, this trading style is anything but complicated—it’s just a bit tedious. Social Arbitrage is a trading strategy where you gather social data and sentiment from places like TikTok video comments and Reddit threads to see what trends, brands, and products are trending among real people—and then convert that information into a stock trade.

The legendary “Unknown Market Wizards” trader Chris Camillo pioneered this trading style. It’s what garnered him attention and recognition by taking his portfolio from $20K to $60M. But in his own words, “Social Arb” makes it sound too fancy; he prefers the term “observational investor.” The goal is to recognize change in the world as it’s happening and to then profit off of that change.

Data you can use for social arbitrage:

Here’s a real example of an individual trader who used these principles to call Build-a-Bear Workshop’s pump: 

And recently, Camillo shared a specific metric he’s developed for identifying trends with “real heat.” Fascinating stuff—he takes the views a creator got on a TikTok video about a product, then divides that by the creator’s average view count. If that number is greater than 10 across the board for multiple creators, he knows he’s struck gold.

We can’t guarantee results with this trading style (or with any style), but we can guarantee that paying attention to social data and sentiments will give you a better understanding of market trends. One simple way to practice social arbitrage trading is to look at a stock’s Reddit mentions over a period of time. AltIndex shows which stocks are trending up in mentions on r/WallStreetBets, like a heatseaker chart for stocks. It also shows whether a stock’s sentiment is bullish, neutral, and bearish.

You shouldn’t just blindly buy whatever stocks Redditors are talking about, but being able to see data like this is like having instant access to the market’s heartbeat.

Try social arbitrage trading out on AltIndex with a 7-day trial here:

Please support our sponsors!

Effort level: Medium

Value investing is one of the most straightforward strategies for building wealth. It involves looking at a company’s financials, management, and competitive edge instead of price charts. The most well-known advocate of value trading would be Warren Buffett.

Warren Buffett didn’t make his billions with anything fancy—he did it by analyzing business fundamentals and picking companies that looked undervalued to him, like Coke (invested $1.3B, stake is now worth $27.6B). 

What does Buffett look for in a stock?

What’s the most important piece of advice for properly evaluating a stock the way Buffett does? “Margin of safety.” This is the amount of room between the price you buy a stock at vs. its “implied fair value per share.” You want to have a margin of safety so that even if you made some mistakes in evaluating the stock, you’ll still be alright in the long term as the stock returns to its “intrinsic value.” 

Determining this number takes some math, but it’s straightforward and very possible for anyone to calculate—follow this guide to try it out for yourself to see if that stock you’ve been eyeing is actually a potential buy opportunity. A margin of safety anywhere between 20% - 30% seems common for value investors, and if you’re looking at a riskier stock, you may want to up that to 50%.

But you don’t want to get caught looking for a “perfect” entry point. If you find a great company, as long as it isn’t at offensively high valuations, Buffett says you should just buy it—don’t wait for a panic-selling drop like a “mortician waiting for a flu epidemic.” In other words, don’t over-wait for the perfect entry point.

For some people, even value investing is more analysis than they’d like. That’s ok—if that’s you, the next strategy might be worth taking a look at.

Effort level: Low

This type of strategy is something unique to financial markets. In what other industry can you look at the exact business moves that industry leaders are making… and copy them? 

Copy Trading is for the people who don’t have time to comb through TikTok comments or do their own analysis of stocks. It’s also an interesting way to diversify your investment portfolio even if you are doing your own analysis and stock picking.

How to copy trade: The method is simple; just copy and paste the same trades that a public figure or company is making. You won’t be able to copy these moves in real time, since public companies and government figures typically report their investments months after they’ve been made. But if you’re in it for the long haul, often a month or two of delay won’t change the long-term possibility for growth that much. 

And yes, you can copy Warren Buffett by looking at Berkshire Hathaway’s investments, or Cathie Woods by looking at what ARK Invest is doing (here are the 5 industries she just predicted 5,000% growth for… trade at your own risk).

But one of the more interesting categories of traders to copy is congress members. 

Nancy Pelosi, Marjorie Taylor Greene, Cleo Fields, and many others have absolutely crushed not only the S&P 500, but also the best hedge funds in the world. Pelosi makes around $200K a year, but her net worth is $264M.

Congress has been accused of insider trading again and again, but they’re still allowed to make these trades. However, they still have to publicly report them—so individual traders can take advantage of their paper trail to copy trade exactly like them. 

If you traded exactly like Nancy Pelosi for the past 10 years, you would be up over 700%. Delays in reporting might have lowered that number, but still, to even catch half of those gains would be spectacular.

AltIndex tracks congress trades daily so you can see the trades of not just one member, but all of them. That way you can balance your copy trading portfolio with multiple congress member strategies at once if you wanted to.

The two investors at the start had the same discipline, but wildly different outcomes. One settled for average. The other chased a strategy and changed his life.

That’s the choice you face too. The market will always offer you the S&P 500. The question is—are you content with “comfortable”… or are you willing to play for “extraordinary”?

That’s all for today’s special edition. We hope you got value from it—reply and let us know if you did. 

Until next week,

— Brandon & Blake