The Flexible Investing Playbook: Asset Allocation Strategies for Long-Term Success

Chapter 10. Evaluating Your Performance—the Right Way

I have tried to expand the boundaries of investment education for all who come in contact with my firm and me. We certainly don't know it all, but we do feel our disdain for conventional wisdom and our nontraditional investment approach allows us to have some insights that are not widely disseminated to the investment public and much of our industry.

I have always approached investing in general as a process of meeting life's financial obligations, as opposed to beating a standard stock or bond "benchmark." That does not mean you shouldn't compare yourself to some investment index for an indication of how you are doing. It just means that you should not get obsessed with comparisons to inanimate objects (benchmarks) that don't know you, don't care about you, and are not going to change the way you live your life—unless you fall prey to their charms as much of the financial media does.

I am confident in my belief that benchmark envy is one of the most destructive forces to investors. And I am equally confident that it will continue to be. Let's be realistic: people love to keep score. That's what benchmarking is. And the same sociological factors that help market pundits on television get ratings also account for the overarching obsession with how one is doing against "the market" or whatever benchmark they use. Again, benchmarking is useful, but it's the context that people get wrong.

Benchmarks, as I see them, are meant to be used ...