Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Thursday, May 20, 2010

Benchmarks revisited

I had earlier produced a post on the importance of benchmarks. This is important in the kind of markets we are experiencing now. I have just finished watching a video where the owner of the firm bragged that since the 2007 peak the clients' performance has been down but it has beat the performance of the S&P 500. Guess what? Most of the clients are in models that are 70% stocks and 30% bonds. The question is not whether they beat the S&P 500. The question is did they beat a passive portfolio of 70% stocks and 30% bonds. The clients should ask: why are you showing me results against an all stock index? Secondly, the index isn't very well diversified. It doesn't hold small cap for example.

Hopefully this helps clients ask the right questions.

I saw another video of a manager who invests in multiple asset classes. This manager argued that, because of their investment style, they shouldn't be compared to a benchmark.

Is it no wonder that so many just throw up their hands and do-it-themselves?


  1. Good point. Better make sure you or your advisor are doing an apples to apples comparison of portfolio performance to benchmark. An informed investor is the only way to keep people honest.

  2. I gave a couple of investment seminars explaining indexed portfolio allocation as it related to risk level and age, and later, some of the attendees came back to me and said, "My current advisor says I'm beating the S&P 500 easily since 2007. I had the same experience that you did.

    I have to say that I am very impressed by your business model. You're going to add significant value to people by charging just 0.4% annually, and having the goal to eventually educate them to the point where you essentially fire yourself when they're ready. My guess is that they'll need you though. Dealing with the emotional part of investing your own money (as you know) is tougher than the intellectual part. You're likely wired for it. But I don't think most people are.
    I really admire the ethics of your business model and I'm going to put you on my blogroll.


  3. re: Andrew

    I appreciate the kind words.

    What I find interesting is that today with all that has been written about risk management for investors there still seem to be some big gaps out there. For example, today's markets are driving many retirees and wanna be retirees nuts. They don't know if it is 2008 again or 3/09 again.
    The "easy" cases are the younger people - even those in their 40s. Some can't sleep at night because they are obsessing over the day-to-day ups and downs of their portfolio. They should look at numbers that show historical returns on their portfolio if they raise 5 to 10% cash. They could probably live with these returns. Too often they become distraught at the bottom of the market and capitulate and swear off investing in stocks ( until after the market goes up a 1,000 points, that is).