Why You're Not Failing: Choosing the Right Investment Benchmark

Puzzled about not beating the market? It's crucial to choose the right benchmark. Get guidance on comparing your portfolio with the right index, ensuring a fair assessment. Don't follow the crowd; find the right measure for your unique investment style.

This article is a website version of our weekly FREE Best Ideas Newsletter sent on 19.12.2023. Sign up here to get it in your inbox every Tuesday.


“Man, I never beat the market!” or Why didn't I beat the [insert your choice] market last year?”


Is this a question you also ask yourself all the time?

Let me ask it differently.

When evaluating your performance do you compare your portfolio to the best performing market last year? It's something I do, and I end up kicking myself and wonder what I could have done better.

But does that mean I'm a bad investor?


Picking the Right Yardstick

Choosing the right benchmark is crucial. If your portfolio is full of smaller companies, comparing it to market value index like the S&P 500 isn’t fair. It is comparing apples to orangutans.

Think about where you are invested and find an index that is close.

If you hold a lot of cash the Vanguard 60:40 may be a better comparison or an index that better matches your investment style.


Value compared to value

When comparing my performance to the S&P it looks bad, I am up around +3% this year compared to the +23% of the index.

But I am mainly invested in (equal weight) small cap value companies worldwide so the S&P is a terrible comparison. So, I can beat myself up not putting 7% of my portfolio in Apple Inc. – its weight in the S&P – or I can find a better benchmark.

For example, the iShares MSCI World Small Cap UCITS ETF which is up 11% this year.

This may be better benchmark. But not really because it’s not value, its 55% invested in the USA where I have had nearly no investments and I have other investments like an oil ETF and managed futures.

So, it’s hard to find a benchmark which I am sure is the same for you.


Then there is hindsight

Remember we are all doing these comparisons at the end of the year. The fact is you had to buy the winning index you are comparing yourself to at the beginning of the year!

Looking back, it looks like an obvious choice, but was it?

Of course not, it is the EXACT same choice as you must make TODAY and invest in that for the whole of 2024.

So where are you going to invest for 2024?

Will the S&P perform as well as it did the past few years with tech valuations so high? Will there be a recession? Will interest rates come down and what will its impact be?

We just do not know!

Your decision TODAY is just as hard as it was in January 2023.


Wrapping It Up: What Makes You a Good Investor

So, what's the takeaway?

Being a good investor isn't about beating an index. It's about having a solid investment strategy that fits your nature that you can stick to through thick and thin.

This is easy to do when you are winning but the real hard part is when you are underperforming.

Think about it this way.

If your choices have held up through market craziness like the financial crisis and the Covid-19 crash, you're doing something right. In fact, you are doing great!

Investing is a journey, not a destination. It's not just about the numbers but also about playing it smart and steady. If you can keep your cool and stick to your strategy through all the market's twists and turns, you're already winning.

Keep at it!



Quant Value newsletter update

Performance last week was great for example:

  • Bel Fuse +16% (+22% last week)
  • BlueLinx Holdings +13%
  • Nojima +12%
  • Sogefi +12% (Recommended this month)


Performance in Europe and North America caught up with the great performance in Asis, especially Japan this year.

Subscribers are still sitting on the following solid gains:


If these ideas sound interesting, you can get more information here: Your Treasure Map to Europe, Asia, and North America's Hidden Gem Small Cap Companies!



Shareholder Yield Letter update

Since May when we started the 23 ideas have already paid an average dividend of 1.3% and have generated an average return of 4.4%.

Top performers so far have been:

  • French bank Société Générale +14.9%
  • Hong Kong beverage company Swire Pacific Limited +14.9%
  • Canadian company Imperial Oil +14.6%


Dividends keep in rolling in making it a great portfolio if you are looking for income ideas.

As things stand today the portfolio has an average historical dividend yield of 5.5% and  bought back 4.6% of their stock last year. This gives you an average Shareholder Yield of 10.0%!

If this sounds like the kind of companies, you would like to invest in you can find more information here: Invest big, win bigger with our market beating high yield large-cap strategy!


Your, helping you find the right comparison analyst



PS To find great companies that exactly meet your investment strategy right now click here.

PPS It is so easy to forget, why not sign up now before you get distracted?