Most people track their investment results casually—or even emotionally—rather than empirically. They might have a rough idea of how their investments are doing from their account statements, but they rarely compare their results to objective benchmarks.If you have nothing to compare your performance against, how do you really know how you’re doing?
When I ask people about their investment performance, I often hear comments like these:
“We have a guy (or gal) who’s great. They have a knack for picking the right stocks. They got us into XYZ Company two years ago, and it’s done really well.”
“I just looked at my statements, and it showed that my investments had a 26% return over the last two years. I thought that was really good.”
“I’ve been using my advisor for ten years, and I’m very happy. They’re beating the estimates from the retirement plan we developed back then.”
“I do all my investing myself. I made a lot of money on lithium battery stocks (or marijuana companies, etc.) over the last couple of years.”
But when you ask these same people how their entire portfolio has performed compared to a benchmark like the S&P 500 over longer periods (3, 5, or 10 years), you often get blank stares or vague answers. Ironically, these are the same people who spend hours online comparing prices on vacuum cleaners to save $50—but when it comes to tracking something that could be costing them hundreds of thousands or even millions of dollars, they don’t know and often don’t want to know.
The Problem with Anecdotal Evidence
Those comments above are what we’d call anecdotal evidence. People love to share their good stock picks—but rarely mention the bad ones. And comparing actual performance to the conservative projections used by financial advisors isn’t valid either. Most advisors use assumptions of 6% or 7% annual growth in their planning models to ensure their clients don’t outlive their money. That’s prudent for planning—but not for measuring results.
The Importance of Long-Term Measurement
Many investors focus too heavily on recent performance because it’s easy to see on their latest statements. But recent performance tells only a small part of the story.The most meaningful measure of investment success is long-term performance. Investment results start to become reliable around the five-year mark, and ten-year results are even more telling. Why? Because the best way to evaluate a strategy is to see how it performs in both good markets and bad markets.Since a typical bull-and-bear market cycle lasts about 7.5 years, you need at least that much history to make a true performance judgment.
Example: My System vs. the S&P 500 (2002–2008)
Year | My System (% Gain) | S&P 500 (% Gain) |
2002 | 0.0% | -23.4% |
2003 | 34.9% | 26.4% |
2004 | 7.4% | 9.0% |
2005 | 2.1% | 3.0% |
2006 | 8.4% | 13.6% |
2007 | 15.9% | 3.5% |
2008 | -9.1% | -38.5% |
Total Return | 68.9% | -21.4% |
Annual Average | 8.5% | -0.9% |
Clearly, my system outperformed the S&P 500 over this seven-year period by about 9% per year. That level of outperformance is above average for my system, which typically beats the S&P 500 by about half that amount.
Focusing on Too Short a Timeframe
Now, let’s look only at the years between 2004 and 2006:
Year | My System (% Gain) | S&P 500 (% Gain) |
2004 | 7.4% | 9.0% |
2005 | 2.1% | 3.0% |
2006 | 8.4% | 13.6% |
Total Return | 18.8% | 27.4% |
Annual Average | 5.9% | 8.4% |
During those three years—average years for the S&P 500—my system underperformed by about 2.5% per year. If you had judged the strategy solely on that short window, you might have abandoned it—just before it dramatically outperformed in the following two years (2007–2008), gaining 56% compared to the S&P 500’s 43%.
The Danger of Short-Term Thinking
Many experienced investors actually make the mistake of evaluating performance over too short a time frame, simply because they watch the market more closely. They get caught up in daily or monthly moves—missing the forest for the trees.I’ve seen very smart investors switch strategies after just a couple of months of underperformance. But if you change investment strategies frequently, you don’t have an investment strategy at all. These folks become victims of a common mistake called Chasing Performance. These “experienced investors” end up making changes after a period of losses or underperformance—essentially “selling low and buying high.”
When It’s Right to Change Course
I’m not suggesting you stick with a bad strategy indefinitely. If your performance diverges dramatically from expectations, it may be time to make a change. For example, the S&P 500 was up 24% in 2023. If your growth strategy lost 10% that same year, it’s a clear sign something is wrong. In strong bull markets, all growth-oriented strategies should deliver solid gains.But no strategy will perform perfectly in all markets. My system prioritizes capital protection during bear markets. In the 2002 and 2008 downturns, my strategy lost just 4.6% per year on average—much less than the market (-31% per year)—and recovered much faster. In the up years, my system only modestly outperformed the market—by a few percentage points per year—and even underperformed during 2004–2006.
Winning the War, Not Every Battle
As a long-term investor, your goal is to win the war, not every battle.
If you’re 65 years old, your investment horizon is still likely 30 years or more. My system is designed to generate above-average returns over 10-, 20-, and 30-year periods while minimizing large losses in severe bear markets.
I wish I could beat the S&P 500 every month or every year—but that’s beyond my powers (and everyone else’s too).
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
The stock market has increased by about 1% over the last month. The steady climb higher was interrupted on October 10th due to China tariff concerns. The market fell almost 3% on the 10th of October. We have gained back most of those losses in the last week.
The S&P 500 is now up almost 13% for the year and the Nasdaq is now up about 17% in 2025 – despite the 19% drop during the tariff announcements in April.
In the chart below you can see the extreme price volatility in April and the steady move higher over the last five months.
We are not receiving timely inflation or jobs data due to the government shutdown. The market is expecting two more rate cuts from the Fed before the end of the year. AI spending continues to drive economic growth in the US.
The steady and consistent increases in stock prices are a cause for some concern. My valuation gauge indicates that the stock market (S&P 500) is now about 25% above its fair market value in late October. This is higher than we were in January 2022 just before the 2022 bear market. The last time the market was overvalued by this much was in 2000 during the dot-com bubble.
I do not trade based on market valuation levels and you should not either. It is just a reminder that you need a strategy in place to protect your savings in case we experience a bear market. Older investors in particular need loss protection.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
I work with many retirement investors who have saved enough money to retire comfortably.But many of those same people worry so much about their finances that they don’t enjoy their golden years as much as they should.
People with a retirement nest egg of over $1 million should be able to coast through retirement without financial worries. In many cases, they could even enjoy a higher income in retirement than they had while working.
Yet rather than coasting, many find themselves constantly stressed about their finances. The main reason for this is their ineffective investing strategy.
The fear of stock market meltdowns causes some retirees to invest too conservatively, which reduces their investment income. Conservative investors may avoid big market declines, but they end up worrying about not having enough income.
Others lean heavily into stocks to boost returns but lack a strategy to handle those inevitable bear markets. These more aggressive investors constantly check the market and live in fear of seeing their savings wiped out.
As most of you know, I created a better way to invest—one that gives retirement investors the best of both worlds: high investment returns with built-in protection against large losses in bear markets.
I often talk about the financial benefits of my system, but my main goal is to eliminate financial stress in retirement. When investors are confident about their gains and know their money is protected during downturns, they can truly enjoy retirement.
There’s no need to check the market every day if you have a rock-solid strategy. My system automatically and continuously monitors the market to determine the optimal investment positioning at all times. A computer executes this process, using a model I designed—but the system itself is fully automated.
A very wise investor once said, “Invest based on what you see, not what you think.”My system relies on actual market price data rather than assumptions or opinions. The markets are often irrational in the short term—nobody can consistently predict what will happen next week, next month, or even six months from now.
However, over the long term—five, ten years or more—markets behave rationally. My system is built on that long-term consistency while adapting to short-term trends to avoid getting crushed in bear markets.
I originally built this system for my own investing. I didn’t want to spend my retirement stressing over volatile financial markets.
Following Warren Buffett’s advice to buy the best funds (like the S&P 500 and Nasdaq-100) and to simply hold them through bear markets doesn’t work for retirees. A severe bear market in your 60s or 70s can destroy your retirement plans.
Traditional asset allocation approaches recommended by financial advisors don’t provide enough income—and they don’t protect well enough against large losses.
Stock picking or market timing based on perceived trends doesn’t work either. Those methods require hours of daily attention, and even then, few investors can outperform a simple S&P 500 index fund over the long haul. Short-term luck happens, but your investment strategy should never depend on luck.
I know this because I’ve tried all of these approaches—and I’ve researched the data. This isn’t opinion; it’s fact. You can check the numbers yourself.
I use my system to invest all of my own money because I’ve never found anything better.
Having complete confidence that my system can deliver average long-term returns between 13% and 15% per year—while protecting against major market losses—allows me to eliminate financial stress in retirement. My automated system does all the monitoring and trading for me.
This is what I want for you.
Your retirement will be so much better when you have higher income—and even more enjoyable when you don’t have to worry about your money.
It usually takes people a year or two of using my investment system to build the same confidence I have. That’s completely understandable. But once they reach that point, it’s an incredible relief. It’s liberating.
I don’t just want you to have more money. I want you to have a better life.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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