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Performance

"How much money have I made and how much risk did I take?" are questions every sensible investor asks constantly. Unfortunately, the answers do not come easily, and those responses most often encountered are even misleading. We offer a few articles that address the problem of accurate investment performance measurement and evaluation.

The Trouble With Investment "Track Records" is something we wrote as a basic introduction to the problem with performance.

Thornburg Asset Management discusses Real Real Returns and how they may be considerably lower than what you see advertised.

The Flaw of Averages. A witty explanation of how deceptive that "average return" can be.

A direct drag on performance is the cost of investing. Morningstar has written an article about sales commissions aimed at advisors that should be of interest to all.

Although most of the references on performance measurement and evaluation will be to explanatory articles, a few Internet sites are worth noting. Investment-Performance.com is aimed primarily at investment professionals but provides a great deal of information on data, indices and other sources not otherwise readily available elsewhere. The venerable Dow Jones & Co. has developed the Dow Jones Portfolio Indexes to encompass portfolios designed to meet targeted maturity dates and portfolios characterized by risk. The indexes can be quite helpful in performance evaluation for individual investors' portfolios.

 

 

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Financial Counselors of VA is an independent Registered Investment Advisor based in Portsmouth, VA, providing
fee-only financial planning services and investment management advice to individuals and families since 1985.

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