Ten Part Guide to Beat the Market

In the article by the same name, To Beat the Market, View It as a Stock, I showed you how to view your portfolio as a single equity and the stock market index of your choice the same way. You could then compare the earnings, debt levels, growth rate, returns on equity, sector compositions, etc. of each “stock”. If, for example, your portfolio has a lower growth rate and a higher price-to-earnings ratio than the market, the odds of you generating good investment returns are very, very slim short of a speculative bubble or if you are investing in an industry in which you have specialized knowledge and you expect a turnaround shortly.

One of the best tools available for doing this with little or no effort is the Morningstar X-Ray program. To access it, you can either pay for a premium subscription to the Morningstar web site, giving you access to countless analyst reports on companies and mutual funds, or you may be able to get it through your stock broker (E-Trade Financial, for example, offers it for all of its brokerage clients.)