Spiders Bull's Pen
by Jeff Fischer ([email protected])

You're about to re-live a famous scene from Raiders of the Lost Ark.

On a hot afternoon in the desert, my opponent will emerge before me with swords swinging from all arms. (Any creature who disfavors the S&P is no man with merely two arms, but instead is a beast with several, all of them deformed). This humanoid will be strangely confident, giant, and most of all, wisely dark under the eyes and foaming from a permanent frown. In a dark suit and tie, the creature will stand with all upper limbs twirling in the still of the afternoon, giant blades humming through the air. Next, he'll begin to yell. He'll shout out why he dislikes the S&P 500 and the stock that mirrors them, the Spiders. Then he'll slowly step forward, arms flailing at full speed, the swinging blades invisible but for the sound...

Me, a mere Fool standing twelve feet away in nothing but jeans, Converse shoes, and a Fool t-shirt, will be thought doomed by the surrounding crowd. Then I'll calmly pull from my belt... a calculator, and enter one number: 11

"Eleven," I'll say aloud. "Eleven."

At the mere hint of the truth in that number, my foe will collapse to the ground as if shot -- shot by a silver bullet that proves whatever argument he had, be it an argument of sheer might or one of reasoned analysis, was little more than filibuster. For even if I hadn't said a word -- had I never pulled the calculator -- time alone would have proven this foe wrong, eventually leaving him for dust in the desert, a small part of a camel highway.

Eleven is the historic annual percentage return of the S&P 500 index. S&P 500 Depositary Receipts <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: SPY)") else Response.Write("(AMEX: SPY)") end if %>, or Spiders, mirror that index and achieve the same return. And yes, we're supposed to duel about Spiders. But how, you might ask, can any creature -- smart or dumb -- side against the S&P 500 and the easy purchase of it through Spiders that trade on the open stock market?

A Fool with a long-term outlook can invest all of his wealth -- down to the pennies between the couch cushions -- in shares of Spiders and never need to check the stock pages again. In fact, he'll never even need to think about investing for the next ten, twenty, or however many years, and he'll still beat over 80% of all mutual funds and professional investment advisors. That's without lifting a finger. This one investment is investment enough for a lifetime (and ironically, it crushes most of the professionals who make investing their whole life). As The Motley Fool Investment Guide shares, if you want to beat the pros and match the market's return with no effort, simply invest in an S&P 500 index fund (or the Spiders), and hold.

With a purchase of Spiders you're set for a successful lifetime of investing. Whatever the market does, your investment is doing as well. You own the 500 leading American companies that constitute the S&P -- from Microsoft, to Coca-Cola, to Intel, to General Electric. It's funny, most of the companies that you're going to buy, if you're going to perform well in your investment life, will be a part of the S&P 500 at some point if they're not already. So if you're wavering about which individual leader to buy, buy them all.

It's unFoolish to argue against an investment vehicle that is so 1) simple, 2) effective, 3) taught throughout Fooldom since its inception. Beyond that, 100 years of historic numbers don't lie -- the stock market should continue to outperform all other traditional investments over the decades as long as the U.S. and world economies continue to grow. And one of the best ways to invest in this growth is to invest in the S&P 500 or the Spiders. Simple. Period. "Forget about it!"

So, what could TMF Parlay, my opponent, possibly argue as the downside to Spiders and the S&P 500? Well, almost certainly he'll point out the current valuation of the S&P. Also, perhaps he'll argue that Fools should want to top the S&P 500 by investing in the Foolish Four or individual stocks. He'd be right on that point, but I'm not belittling other methods of investing. This duel is about Spiders, and Spiders are good -- regardless of what else is out there, the S&P tops most all of it. In fact, leave it to a bunch of Fools to tweak and develop something even better -- the Foolish Four. The Foolish Four is excellent as well. The Foolish Four beats Spiders. That doesn't make Spiders bad, though. Read the 13 Steps to Investing Foolishly. When you're ready to move beyond the S&P, consider the Foolish Four. Great!

As for the Spider's valuation -- valuation is based on future events, and not just earnings results. Interest rates, the amount of cash flowing into stocks, investors' perception of market value, the world economy... all of these things impact the future valuation granted the stock market. If you can predict all of these events and draw conclusions on the current market valuations, you're a magical, mythical creature indeed. If my opponent predicts the future value of the market, we can top him with a Wise cap and be done with him.

Finally, TMF Parlay will probably point out that the Fool Port recently sold its shares of Spiders. As readers know, though, this was done only to buy a stock that we think can outperform the S&P over the long term. So what else might Parlay attack?

It makes sense to now actually see the opponent's weapons and strategies before building a stronger wall of defense. So let's have 'em! Here comes TMF Parlay, all arms swinging, mouth drooling, bugged eyes red and sagging, ready to attack the mighty S&P 500. Just picture the hot desert behind him, watch those arms flail, and remember the truthful silver bullet -- 11% annualized returns.

Next: The Bear Argument