What it Takes to Beat the S&P 500 Over 30 Years

Fidelity’s Will Danoff, who manages the Contrafund, gives some insight into his remarkable track record. 

Will Danoff is an outlier. He is the sole manager of Fidelity Investments’ storied Contrafund, which is a $139 billion large-cap growth fund. No one else in the country runs a fund that big by themselves. What’s more impressive is that the Contrafund has outperformed the S&P 500 Index 100% of the time in rolling 10-year time periods since Danoff took the helm three decades ago. The fund’s returns beat the market by an average of 3.21 percentage points per year over that time. 

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Danoff once asked Warren Buffett what advice would he give him as a manager of $100 billion. Buffett replied, “When you have a good idea, bet big.” Danoff returned to his office and promptly reviewed the 600 stocks in Contrafund. He decided the bottom 300 were either “Up or Out,” while the top 50 stocks needed to make up a bigger proportion of the fund or be sold.  If you favor a stock, Danoff says you should own more of it in a more concentrated portfolio. One of the great lessons over 30 years is that even if a stock has doubled or tripled in price, there are more gains to be had.

Danoff also explains why Fidelity “is a great place to manage money.” He has worked with many of the firm’s storied money managers, including Peter Lynch, Joel Tillinghast, Jeffrey Vinik and Ned Johnson, among many others.

A list of his favorite books are here; A transcript of our conversation is available here.

You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Doug DeMuro, one of the most popular online car reviewers. His YouTube channel has 3.7 million subscribers, and his videos have been streamed 1.1 billion times, with each video averaging 2 million views. He conceived/co-founded the auction site Cars & Bids. He is the author of two books: “Plays With Cars,” and “Bumper to Bumper.”

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Barry Ritholtz at britholtz3@bloomberg.net

To contact the editor responsible for this story:
Robert Burgess at bburgess@bloomberg.net