Great thoughts on the importance of comparing your returns to a meaningful benchmark. "My experience is that most investors, and indeed many advisers, don’t actually know what their net returns have been and how those returns compare to the market return."
If you're not measuring your progress toward some type of goal, you have no way to properly learn from mistakes or celebrate victories. Benchmarks, like your custom graph at my.yoportfolio.com, are important - they help you set a goal, measure your results, learn, adapt, and grow.
This refreshing list of quick reminders is something worth returning to every now and then. A few of my favorites include...
- "For buy and hold to truly work you have to do both when markets are falling."
- "No investment strategy can outperform at all times."
- "Almost any investor can outperform for a short period of time."
- "If you invest in index funds you cannot outperform the market."
- "Successful investing is more about behavior and temperament than IQ or education."
This oldie from 2012 is also worth returning to for some advice that will never expire. For reference, the P/E Ratio of the S&P 500 is about 25 at the time of this writing. Keep that in mind, but more importantly, remember "that buy and hold means holding for a long time, like 10 or even 20 years."
An entertaining look at what has influenced CEO compensation over the years.
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