A retail investor who reports consistently beating the S&P 500 has detailed his approach for 2026. Erik Smolinski, a Marine veteran who runs Outlier Trading, shared his methods. According to Business Insider, Smolinski averaged annual returns of 24.6% from 2018 to 2022 and achieved triple-digit gains in 2023.
Smolinski stated that not every investor needs to try to outperform the index. He follows three principles that passive investors can adopt. First, he recommends maintaining a long-term plan. "Make sure that your holdings reflect what you think the world might look like in three to five years from now," he told Business Insider. For him, that future centers on artificial intelligence, but the broader advice is to focus on the big picture rather than daily market noise.
Historical data supports a long-term view. The S&P 500 has historically delivered about 10% annualized returns, including dividends and adjusted for inflation. Morningstar's Active/Passive Barometer indicates only around 20% of active funds outperform their comparable index funds over the long run. S&P Dow Jones' SPIVA scorecard shows about 65% of active funds underperformed the S&P 500 in 2024.
Second, Smolinski stresses putting money to work through automation and compounding. He suggests setting up monthly transfers from a paycheck into an investment account. Experts at Nasdaq describe this dollar-cost averaging strategy as a way to hedge risk while building wealth over time. It helps manage risk and maintain emotional discipline compared to trying to time the market.
Third, he advises increasing income to invest more. This could involve seeking a raise, pursuing a promotion, or starting a side hustle. Smolinski believes more incoming money allows for more investment, accelerating progress toward spending on valued priorities. Research by J.P. Morgan Asset Management found that households saving even a few percentage points more consistently ended up with larger retirement balances over time. Experts at Vanguard note that investment amount can be more crucial than return rate in early decades.
As 2026 begins, low-cost platforms and passive investing are keeping everyday investors active. Major firms have issued predictions. Vanguard expects U.S. stocks to post moderate but positive returns, with long-term projections in the 4% to 5% annual range. Charles Schwab recommends diversifying away from just tech. Morgan Stanley bets on U.S. stocks to shine in 2026, eyeing the S&P 500 nearing 7,800 as corporate earnings and AI-driven productivity sustain market activity.