"The Problem With Most Performance Reports"

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Taylor Larimore
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Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

"The Problem With Most Performance Reports"

Post by Taylor Larimore »

Bogleheads:

Vectors by George Sisti is one of my favorite financial newsletter writers. Below are "Gems" in his latest June issue:
“My portfolio returned 6% last year and your portfolio returned 15%. Yet my portfolio outperformed yours. How can this be?” This is not a trick question but reveals how percentage based performance reporting can be misleading."

"What is going on in your life, not what is happening in the markets, should determine your asset allocation."

"The performance of your portfolio over the past 3 months, which was influenced primarily by random,
unpredictable events, is of no long-term significance."

"You should have a written a financial plan containing an investment strategy that determines your portfolio allocation –-
one that is appropriate for your goals, time horizon and risk tolerance. Neither you nor your advisor can control your
portfolio’s performance."

"Sadly, many investment advisors use short-term performance reports as a justification to churn accounts – selling what
has disappointed lately and replacing it with what has recently outperformed. It is an easy sell, and it occurs much too
often."

"After stocks have risen, future returns will likely be lower. And the converse is true: after stocks have fallen, future returns will likely be higher."

"I do not care if your assets increased because of portfolio performance, additional contributions on your part, an inheritance
or if you got lucky in Las Vegas. Progress on this journey is measured by net worth accumulation, not rate of return."

"We permit ourselves to be influenced by social media doomsayers who have perfected the ability to make the
unpleasant sound catastrophic."

"Own a globally diversified portfolio of index funds. Maintain the faith that our capitalist system will continue to do what it has been doing for the last two centuries because every day people wake up wanting to make better lives for themselves and their
families."

"It is noteworthy that unlike gambling in a casino, the likelihood of successful stock investing increases the longer you play."

"Be passive, stay diversified, keep costs down, rebalance periodically and stay the course. That is how to earn returns
that beat most professionals."

"When the left side of the chart looks like the left side of the Eiffel Tower, it will not be long before the right side of the chart looks like the right side of the Eiffel Tower."
https://oncoursefp.com/images/Vectors%2 ... 0final.pdf

Thank you Mr. Sisti.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: “Learn every day, but especially from the experiences of others. It's cheaper!”.
"Simplicity is the master key to financial success." -- Jack Bogle
Laurizas
Posts: 519
Joined: Mon Dec 31, 2018 3:44 am
Location: Lithuania

Re: "The Problem With Most Performance Reports"

Post by Laurizas »

Taylor! Thanks to you, I receive this newsletter every month by email also and I enjoy reading it.
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