This Overlooked Strategy Beats the S&P 500 And Most Investors Still Ignore It
What strategy beat the S&P 500 by 50% over five years...without chasing hype or timing the market? Here it is…
As of June 15, 2025, the financial landscape continues to evolve, presenting both challenges and opportunities for investors.
Amidst this dynamic environment, the Capitalist Exploits Capital Gains Portfolio offers a compelling case study in asymmetric investing…a strategy that has outperformed both the S&P 500 and global stock markets over a five-year rolling period.
The accompanying performance chart, spanning from March 2020 to February 2024, illustrates the portfolio’s resilience, with the Insider* portfolio achieving a remarkable 100% return compared to the S&P 500’s 50% and the broader world stock market’s gains.
This article digs into what asymmetric investing entails, why it stands out as a robust strategy for long-term investors, particularly in the current market, and how individuals can begin building their own asymmetric portfolios.
Understanding Asymmetric Investing
Asymmetric investing is a disciplined approach that focuses on generating outsized returns while limiting downside risk.
The core principle is to identify undervalued or "unloved" assets…stocks, sectors, or markets that are out of favor but possess strong fundamentals or catalysts for recovery.
Investors then hold these assets for an extended period, selling them when they regain popularity or reach their intrinsic value.
This strategy leverages the asymmetry between potential upside and downside: the potential for significant gains far outweighs the risk of modest losses.
The Capitalist Exploits Capital Gains Portfolio exemplifies this philosophy.
As the performance chart indicates, the portfolio’s blue line (Insider*) has consistently trended upward, even during volatile periods like March 2022, where it managed a 40% gain despite market turbulence.
This resilience stems from a process-driven approach…buying undervalued assets, holding through market cycles, and selling at optimal points…rather than chasing short-term trends or speculative hype.
Why Asymmetric Investing Thrives in Today’s Environment
The current investing climate, marked by inflationary pressures, geopolitical uncertainties, and fluctuating interest rates, makes traditional buy-and-hold strategies in broad indices like the S&P 500 less predictable.
Asymmetric investing offers a strategic edge by focusing on mispriced opportunities that broader markets often overlook.
Since March 2020, the Capitalist Exploits portfolio has navigated these challenges, outperforming the S&P 500 by 50 percent, a testament to the strategy’s adaptability.
For long-term investors, this approach is particularly appealing.
The chart reveals periods of pullbacks, such as those following March 2022, where the portfolio experienced volatility but ultimately recovered.
This underscores a critical tenet: success requires conviction in the process.
Investors must understand why they’ve selected an asset…its undervaluation, growth potential, or macroeconomic tailwinds…and remain patient through short-term fluctuations.
In an era where central banks are recalibrating policies and markets are grappling with post-pandemic recovery, this focus on fundamentals over sentiment provides a buffer against erratic market movements.
Moreover, the strategy’s emphasis on outperformance over a rolling five-year basis aligns with the goals of retirement savers, wealth builders, and institutional investors seeking sustainable growth.
The portfolio’s ability to beat the S&P 500, measured via the ticker SPY, suggests that asymmetric investing can deliver compounding returns that outpace traditional benchmarks, especially when global diversification alone falls short.
The Psychological and Practical Benefits
Investing asymmetrically also cultivates a mindset of discipline and research.
The Capitalist Exploits team emphasizes that the chart’s impressive returns should not be the sole motivator; instead, it’s the belief in the process that sustains success.
This psychological anchor helps investors weather drawdowns…such as the tough period post-March 2022…without succumbing to panic selling.
The 40% gain during that volatile stretch highlights how holding firm in a well-researched position can yield rewards when markets stabilize.
Practically, the strategy reduces reliance on frequent trading, lowering transaction costs and tax implications.
By targeting assets with high upside potential and limited downside, investors can build a portfolio that balances risk and reward, a critical factor as market volatility persists into 2025.
Building Your Own Asymmetric Portfolio
Getting started with asymmetric investing requires a structured approach.
Research Undervalued Assets: Identify sectors or companies trading below their intrinsic value. Look for firms with strong balance sheets, innovative products, or exposure to emerging trends (e.g., coal, uranium, Argentina, offshore oil services and producers) that are temporarily out of favor.
Analyze Macro Trends: Consider global economic shifts…interest rate changes, commodity prices, or geopolitical events…that might create mispricing opportunities. For instance, regions recovering from economic downturns often yield undervalued stocks.
Diversify Strategically: Spread investments across sectors or themes (5-10% allocation to each sector or theme, 1-2% per ticker) to mitigate risk, but focus on a concentrated portfolio of high-conviction picks, as seen in the Capitalist Exploits model.
Adopt a Long-Term Horizon: Commit to holding assets through market cycles, typically three to five years, to capture the full upside. Use the portfolio’s performance as a benchmark…aim to exceed the S&P 500 over a similar timeframe.
Monitor and Rebalance: Regularly assess holdings to determine when an asset has reached its target value. Sell methodically to lock in gains and reinvest in new opportunities.
We offer a short asymmetric investing course for paid newsletter subscribers, here.
The key is to develop a personal investment thesis for each holding, ensuring alignment with the asymmetric philosophy.
Learning from Capitalist Exploits
The Capitalist Exploits Capital Gains Portfolio serves as a practical blueprint.
Its Insider* program, detailed in the performance chart, is based on the firm’s managed accounts (Glenorchy Capital), offering a real-world example of asymmetric investing in action.
Since March 2020, the portfolio has demonstrated a clear edge, with returns peaking at 100% by February 2024, outpacing both the S&P 500 and global indices.
This success is attributed to a rigorous process of identifying and holding undervalued assets, a methodology that individual investors can emulate.
For those seeking to deepen their understanding, the Capitalist Exploits Insider program provides exclusive insights into this strategy.
It offers model portfolio’s, trade ideas, and community support to help investors apply asymmetric principles effectively.
Invest In The Same Stocks We Invest In!
The current market environment demands a strategy that balances risk and reward while capitalizing on overlooked opportunities.
Asymmetric investing, as proven by the Capitalist Exploits Capital Gains Portfolio, offers a path to achieving this.
With the portfolio’s track record of outperforming the S&P 500 by 50% over five years, now is the time to explore this approach.
Visit our Insider information page for a preview into the Insider program and take the first step toward building a portfolio that thrives in any market condition.
Embrace the process, commit to the long term, and unlock the potential for asymmetric gains.
*Note: Returns shown are from the first managed account client, which the Insider portfolios are based on. This is for information purposes only; past performance does not guarantee future results. S&P 500 measured using the ticker SPY.
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☝️ Invest in the same stocks we are…
Poor Bullwinkle: https://kingcambo812.substack.com/p/this-weeks-dumpster-fire-digest-edition