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"Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 12:46 pm
by Taylor Larimore
Bogleheads:

The Wall Street Physician has posted a thought-provoking article about people who compare their investment returns with others on the internet. Bogleheads are mentioned.

Don’t Compare Your Investment Returns With Others (Especially On The Internet)

Best wishes.
Taylor

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 12:52 pm
by willthrill81
In general, comparing most aspects of your life to others is not a good idea. Doing so can easily lead to envy, regret, and a loss of joy.

"The grass is always greener on the other side of the fence."

And in the context of this article, you frankly can't rely on the returns glibly thrown out by others, especially on the Internet.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 12:55 pm
by livesoft
Not mentioned in the blog article is that probably most people don't calculate their return correctly in the first place.

I think one should compare investment performance to a proper benchmark. This is true whether one uses someone else to help them or one is do-it-yourself. There is always room for continuous improvement.

I suppose next is that one should not compare their tax returns either. :twisted:

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 12:59 pm
by GoldStar
Since joining I have actually been surprised by the many threads here looking at returns in detail. To me - the beauty of indexing - is I don't need to compare my returns to others as I know my returns are the returns of the market. I have no idea what my returns have been as I haven't take the time to figure them out (I know how much my account balances have grown but since I'm still accumulating the growth includes new contributions).

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 1:35 pm
by deltaneutral83
"Most people" on the internet have a perfect ten model wife, mid six figure income, several 10 baggers a year on the NYSE, children who ace the SAT and get scholarships from 2-4 IVY league schools, and run marathons quarterly. The rest of us will simply have to make due with what we have.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 1:53 pm
by Portfolio7
deltaneutral83 wrote:
Mon Feb 11, 2019 1:35 pm
"Most people" on the internet have a perfect ten model wife, mid six figure income, several 10 baggers a year on the NYSE, children who ace the SAT and get scholarships from 2-4 IVY league schools, and run marathons quarterly. The rest of us will simply have to make due with what we have.
One good reason to compare returns is to kill whatever investing ego you may have built up. It becomes real clear real fast just how random it all is, and as the WCI once put it, there are hundreds of portfolios (thousands...) that are 'better' than yours.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 1:56 pm
by jebmke
livesoft wrote:
Mon Feb 11, 2019 12:55 pm
Not mentioned in the blog article is that probably most people don't calculate their return correctly in the first place.
It would not surprise me if most people don't calculate their return at all. I don't.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 2:06 pm
by Day9
I feel this way about stories from real estate investors. Real estate is leveraged and undiversified so there are bound to be a lot of big winners and big losers in that space, but the big winners are louder.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 2:09 pm
by dziuniek
jebmke wrote:
Mon Feb 11, 2019 1:56 pm
livesoft wrote:
Mon Feb 11, 2019 12:55 pm
Not mentioned in the blog article is that probably most people don't calculate their return correctly in the first place.
It would not surprise me if most people don't calculate their return at all. I don't.
I have a general idea (based on AA) but I could be off ... A LOT.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 3:07 pm
by nedsaid
deltaneutral83 wrote:
Mon Feb 11, 2019 1:35 pm
"Most people" on the internet have a perfect ten model wife, mid six figure income, several 10 baggers a year on the NYSE, children who ace the SAT and get scholarships from 2-4 IVY league schools, and run marathons quarterly. The rest of us will simply have to make due with what we have.
Yes, in Lake Woebegone, everyone is good looking and above average.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 3:14 pm
by balbrec2
Nobody's business but my own 8-)

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 3:25 pm
by Clever_Username
Just makes me think of the Brad Paisley song about being online.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 3:36 pm
by livesoft
I want to know the performance of my portfolio compared to a benchmark in order to know if there are any personal behavioral finance issues that I need to look into.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 4:11 pm
by staythecourse
livesoft wrote:
Mon Feb 11, 2019 3:36 pm
I want to know the performance of my portfolio compared to a benchmark in order to know if there are any personal behavioral finance issues that I need to look into.
Bingo. If you are a passive investor then there is no reason to compare your returns to others. If you are a passive investor find the benchmarks in the weighted averages to your asset allocation and compare it to that. That is ALL a passive investor should care about.

This is why I have NEVER been influenced by frame of reference risk. Unless one is 100% in SP500 why does it matter what the SP500 even does?

Good luck.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 4:21 pm
by CascadiaSoonish
We're getting ready to join the fancy-pants social + athletic club in town, it's an amazing facility. But the one thing that's giving me pause is knowing that it will put our whole family into an environment with a lot of wealthy members. "Daaaaad, why don't we drive a new Audi like the Joneses?" is not something I want to hear. Similarly, I work in an industry where speculative ventures are lauded but grinding out a consistent return is almost looked down upon. It takes no small amount of mental effort on my part to continually remind myself how well-situated our family is...."comparison is the thief of joy" and all that.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 4:53 pm
by willthrill81
livesoft wrote:
Mon Feb 11, 2019 3:36 pm
I want to know the performance of my portfolio compared to a benchmark in order to know if there are any personal behavioral finance issues that I need to look into.
You're describing comparing your portfolio's performance with that of an objective benchmark. I too find some value by doing so. But that's very different from comparing your portfolio's performance with someone else's portfolio performance, whose goals may be very different than yours, portfolio composition may vary greatly, they got 'lucky' with their stock picks, etc.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 5:01 pm
by livesoft
willthrill81 wrote:
Mon Feb 11, 2019 4:53 pm
.... But that's very different from comparing your portfolio's performance with someone else's portfolio performance, whose goals may be very different than yours, ....
Right, don't compare your investment returns with others (especially on the the internet).

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 5:14 pm
by Phineas J. Whoopee
When I invested in individual small-cap stocks for two years I doubbleed my monneey!

Except for those other small stocks. One broke even, and the remainder lost. The one that doubled wasn't enough to make up for the rest.

For the two years my total return on my experimental stake was -2%. Vanguard's Small-Cap Index Fund, VSMAX, lost 1.5%. The time and effort ended up not being worth it.

Somebody with different start and end dates may have experienced a different relative return.

PJW

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 5:37 pm
by DeadPoets
Yawn. I love when bloggers tell me what to do.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 6:29 pm
by Fallible
No comparing returns here. The only thing I wonder about other investors is whether they're active or passive: if active, I wonder about the fees they pay, if they're even aware of them, and if they ever total them up over a long period; if passive, I might wonder whether their asset allocation is right for them. In both cases, I would just wonder, not ask.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 6:51 pm
by Mr.BB
willthrill81 wrote:
Mon Feb 11, 2019 12:52 pm
In general, comparing most aspects of your life to others is not a good idea. Doing so can easily lead to envy, regret, and a loss of joy.

"The grass is always greener on the other side of the fence."

And in the context of this article, you frankly can't rely on the returns glibly thrown out by others, especially on the Internet.
You have half of one of my favorite sayings....
"The grass is always greener on the other side of the fence." "But you still have to mow the lawn!"

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 8:08 pm
by NotWhoYouThink
Through other threads and numerous articles in the popular and business press the last couple of weeks, we have established that most people don't understand their taxes, tax rates, brackets, or returns vs. refunds. Why anyone would expect most people to understand their investment returns is a mystery.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 8:14 pm
by 2015
I'm not interested in my own returns, let alone that of others. One of the best things about owning The Three Fund portfolio is I get to focus on much more important things than short term returns. Greed and ego lead to iatrogenic errors of the investing kind.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 8:16 pm
by youngpleb
It can definitely be a source of stress. I read a lot of different finance blogs written by individuals who do things like investment returns and networth reports. If you're just starting out, it can be a bummer. So now I lay off of those blogs and only brush up every other week or so instead of every other day.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 9:33 pm
by Shamb3
When i was young I worked at a liquor counter that sold lotto tickets. Lots of people bragged about how much they won, but I know these people, they are in there every day spending $5-$20... They never seem to count what they spend, only that they won $120 that one time.

That's what I think of whenever someone brags that they were invested in 1 stock and it did so well.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 9:44 pm
by arcticpineapplecorp.
I'd say InvestorNewb's post (link below in the article) and all that posts 47 pages of responses just got called out (except for those who said they don't know and don't care):
There is a longstanding thread on Bogleheads called “What are you up YTD?”, which asks readers to post their investment returns from January 1st to the current date (year-to-date or YTD). viewtopic.php?f=10&t=145610

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 9:48 pm
by Ferdinand2014
Its part of the reason I like living in my modest house in a small town in northern New England that no one has heard of. There are no Joneses to keep up with or even neighbors for that matter. My little pot at the end of the rainbow is of no consequence to anyone and even if they knew the value or growth, could care less. What they would be impressed by, is if I could replace the shingles on my roof or split 6 cord of wood by hand. When my patients show up to the ED, its a point of pride as to how many fingers they've lost working in the woods over the years.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Mon Feb 11, 2019 9:55 pm
by cheese_breath
nedsaid wrote:
Mon Feb 11, 2019 3:07 pm
deltaneutral83 wrote:
Mon Feb 11, 2019 1:35 pm
"Most people" on the internet have a perfect ten model wife, mid six figure income, several 10 baggers a year on the NYSE, children who ace the SAT and get scholarships from 2-4 IVY league schools, and run marathons quarterly. The rest of us will simply have to make due with what we have.
Yes, in Lake Woebegone, everyone is good looking and above average.
That's not what it says...
"where all the women are strong, all the men are good-looking, and all the children are above average."

It says nothing about the women or children being good looking or anybody except the children being above average.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Tue Feb 12, 2019 10:25 am
by htdrag11
To compare is human but it will only bring unhappiness. So why suffer?
Don't worry, be happy with what you have. Stay the course. :sharebeer

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Tue Feb 12, 2019 11:24 am
by Dottie57
I don’t compare to others since I don’t think people always tell the full unvarnished truth. One of my former co-workers claimed to do so well I thought he would have been retired. I am now retired and he isn’t. Go figure.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Tue Feb 12, 2019 11:32 am
by TSR
Day9 wrote:
Mon Feb 11, 2019 2:06 pm
I feel this way about stories from real estate investors. Real estate is leveraged and undiversified so there are bound to be a lot of big winners and big losers in that space, but the big winners are louder.
Not only that. My experience is that real estate investors often calculate "return" by reference to their cash-flow, casually omitting the cost of borrowing, the time-value of money, vacancies, etc. I'm referring more to people who own, say, 2-10 rental properties, not the people who own a lot more and really know the business end. I'd suspect there is a lot of cherry-picked data in anyone's estimation of returns, but especially among real estate investors.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Tue Feb 12, 2019 11:42 am
by Fallible
arcticpineapplecorp. wrote:
Mon Feb 11, 2019 9:44 pm
I'd say InvestorNewb's post (link below in the article) and all that posts 47 pages of responses just got called out (except for those who said they don't know and don't care):
There is a longstanding thread on Bogleheads called “What are you up YTD?”, which asks readers to post their investment returns from January 1st to the current date (year-to-date or YTD). viewtopic.php?f=10&t=145610
.
This reminds me of Jack Bogle's words from his book, Enough, and I think in a general way they pertain here:
As I have earlier noted, the most important things in life and in business can’t be measured. The trite bromide 'If you can measure it, you can manage it' has been a hindrance in the building a great real-world organization, just as it has been a hindrance in evaluating the real-world economy. It is character, not numbers, that make the world go ‘round. How can we possibly measure the qualities of human existence that give our lives and careers meaning? How about grace, kindness, and integrity? What value do we put on passion, devotion, and trust? How much do cheerfulness, the lilt of a human voice, and a touch of pride add to our lives? Tell me, please, if you can, how to value friendship, cooperation, dedication, and spirit. Categorically, the firm that ignores the intangible qualities that the human beings who are our colleagues bring to their careers will never build a great workforce or a great organization.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Tue Feb 12, 2019 1:09 pm
by nick evets
Dottie57 wrote:
Tue Feb 12, 2019 11:24 am
I don’t compare to others since I don’t think people always tell the full unvarnished truth. One of my former co-workers claimed to do so well I thought he would have been retired. I am now retired and he isn’t. Go figure.
Yup. Internet forums, in general, despite the online community aspect, aren't always socially healthy places.

And because the subject matter is financial guidance, there is an inherent license to share details of personal wealth, and financial achievement that would otherwise be socially...well, rude. Such disclosures, whether real or fabricated, combined with the inherent problems of online communication -- humble (or outright) bragging, one-upping, etc, can be unsettling. Even the most secure can only read so many threads, "Oh, I'm 31 and have 4.2 million...," or " 0% is MY SWR in my planning as I retire at 48 with a pension, 2 million in my ROTH and 4 in taxable...." before being a bit unsettled.

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Tue Feb 12, 2019 1:16 pm
by willthrill81
Fallible wrote:
Tue Feb 12, 2019 11:42 am
arcticpineapplecorp. wrote:
Mon Feb 11, 2019 9:44 pm
I'd say InvestorNewb's post (link below in the article) and all that posts 47 pages of responses just got called out (except for those who said they don't know and don't care):
There is a longstanding thread on Bogleheads called “What are you up YTD?”, which asks readers to post their investment returns from January 1st to the current date (year-to-date or YTD). viewtopic.php?f=10&t=145610
.
This reminds me of Jack Bogle's words from his book, Enough, and I think in a general way they pertain here:
As I have earlier noted, the most important things in life and in business can’t be measured. The trite bromide 'If you can measure it, you can manage it' has been a hindrance in the building a great real-world organization, just as it has been a hindrance in evaluating the real-world economy. It is character, not numbers, that make the world go ‘round. How can we possibly measure the qualities of human existence that give our lives and careers meaning? How about grace, kindness, and integrity? What value do we put on passion, devotion, and trust? How much do cheerfulness, the lilt of a human voice, and a touch of pride add to our lives? Tell me, please, if you can, how to value friendship, cooperation, dedication, and spirit. Categorically, the firm that ignores the intangible qualities that the human beings who are our colleagues bring to their careers will never build a great workforce or a great organization.
"Enough is as good as a feast."
- British proverb

Re: "Don’t Compare Your Investment Returns With Others (Especially On The Internet)"

Posted: Tue Feb 12, 2019 7:32 pm
by Fallible
willthrill81 wrote:
Tue Feb 12, 2019 1:16 pm
Fallible wrote:
Tue Feb 12, 2019 11:42 am
arcticpineapplecorp. wrote:
Mon Feb 11, 2019 9:44 pm
I'd say InvestorNewb's post (link below in the article) and all that posts 47 pages of responses just got called out (except for those who said they don't know and don't care):
There is a longstanding thread on Bogleheads called “What are you up YTD?”, which asks readers to post their investment returns from January 1st to the current date (year-to-date or YTD). viewtopic.php?f=10&t=145610
.
This reminds me of Jack Bogle's words from his book, Enough, and I think in a general way they pertain here:
As I have earlier noted, the most important things in life and in business can’t be measured. The trite bromide 'If you can measure it, you can manage it' has been a hindrance in the building a great real-world organization, just as it has been a hindrance in evaluating the real-world economy. It is character, not numbers, that make the world go ‘round. How can we possibly measure the qualities of human existence that give our lives and careers meaning? How about grace, kindness, and integrity? What value do we put on passion, devotion, and trust? How much do cheerfulness, the lilt of a human voice, and a touch of pride add to our lives? Tell me, please, if you can, how to value friendship, cooperation, dedication, and spirit. Categorically, the firm that ignores the intangible qualities that the human beings who are our colleagues bring to their careers will never build a great workforce or a great organization.
"Enough is as good as a feast."
- British proverb
It is indeed. :-)