Every now and then someone will look at me as if I have “two heads” when I proudly declare, without any hesitation, or doubt, that in my personal investing I do not care if I “beat the market”.
Yes, that’s right! I don’t care if “The Dow lost 800 points” or if “Futures point to a higher open this morning” as news sites, TV stations, social media and so on will never stop letting me know.
I don’t feel good, or content, if the S&P is down ~9% so far this year but my portfolio is down “only” 1.5% and I don’t feel great that my personal account is up 51%+ while the S&P 500 is up less than 39% with its dividends reinvested since the end of 2019.
But, I feel “pretty-pretty good” (yes, I am one of those Seinfeld fans) for myself and my financial future because I am on track to double my net worth every five years which is what a 15% annual return does for you.
And why does that make me feel “pretty-pretty good”? Because doubling my net worth every five years is my personal financial goal, or to be exact… one side of my financial goal. I will write about the other half on another equally short article but if you are curious think “even quilled”, wink-wink…
In conclusion, I don’t know what your personal financial goal is, or what you value in life and I am not in the advice business nor do I sell anything.
So, instead of aspiring to “beat the market” it may be more beneficial to one’s investment success to focus on reducing the volatility of one’s portfolio.
Note: The image presented above shows a series of returns in blue that is 38% as volatile as the orange bar data (daily returns of the SPY ETF). During the period presented, the blue line strategy has outperformed the SPY by more than six percentage points.
Compound Interest 