Hi Buddies,
I knows its abit noobies for me to ask this question. Presumably, fundamental investor would judge its performance by computing its returns vs the stock market index (Beating the market). However, one can only participates in stock market index by investing in index funds or ETF. Most of the ETF giving out dividends and of course most companies does also do that. Should we take the dividend that we are getting into account? When computing stock index performance, shall we also take account for that?
Do we need to care about beating the market? Only unit trust marketer cares about it. I am interesting only on the absolute return in long run meeting my own financial objective. So what if you were beating the market by losing 40% when market loss 50% in 2008.
I have a slight different view on that but i agreed to the point that just not beating the market.
A very bad market condition like 2008, let says achieved -15% vs market -50% drop, i think you know where you perform.
If achieved -40% compared to market -50%. I would say ok i beat the market but my performance is still very bad.
Because of the awareness, this will keep us thinking.
i am a believer in Absolute Return no matter what you say or think .
Why?
Believe it or not,
Even WB (his portfolio) lost money in 1999 to the tune of 19%+ while S&P 500 for that year gained 19%+. IIRC
I prefer to beat the inflation and if possible by a margin.
(26-04-2014, 03:25 PM)GPD Wrote: [ -> ]I prefer to beat the inflation and if possible by a margin.
Ya lol; if not might as well put all my money in the bank. Why need to think so much. At times cause headaches and even heartaches.
(26-04-2014, 04:15 PM)Temperament Wrote: [ -> ] (26-04-2014, 03:25 PM)GPD Wrote: [ -> ]I prefer to beat the inflation and if possible by a margin.
Ya lol; if not might as well put all my money in the bank. Why need to think so much. At times cause headaches and even heartaches.
Exactly. My view is that all those benchmarking against indices are measures use to measure fund managers performance. In a way it is correct to do so because it is their job to manage money and invest in the market to get a return.
For retail investors, they do have a choice of not to invest and simply put money in banks for a virtually no risk return.
So one should know when you evaluating your performance what you are really seeking to understand and what rewards you are after.
Instead of indices, I monitor ETF performance as my practical alternative and benchmark to active management. Reason is because if I cannot beat the ETF, I might as well invest passively. Also, the ETF as a proxy to market helps to keep me grounded - for example, I do not get big headed with unrealised investment gains when the general market rallies.
Come to think of it I have a few personal goals and i won't know unless we evaluate our own performance. I think most people do it one way or another unknowingly for some. I prefer using excel. Is automatic with excel so is quite effortless and enjoyable.
1. Beat Inflation
2. Beat Market
3. Beat my annual living cost
4. Achieve sustainability
Not all will light up each year. But point is you know just like meters.
(25-04-2014, 10:17 PM)D.L Wrote: [ -> ]Hi Buddies,
I knows its abit noobies for me to ask this question. Presumably, fundamental investor would judge its performance by computing its returns vs the stock market index (Beating the market). However, one can only participates in stock market index by investing in index funds or ETF. Most of the ETF giving out dividends and of course most companies does also do that. Should we take the dividend that we are getting into account? When computing stock index performance, shall we also take account for that?
Why not? Dividend is part of the real return of investment. In 2013, the STI was flat, but dividend return is 3.3%. The STI return should be 3.3%