Measuring Progress

Measuring Progress.

There is an often told story in the investment advisory world of the client who sought guidance every day from his advisor based on the daily performance of his funds. Finally one day the advisor asked the client if he would on his way home measure the distance from the office to his house. The client agreed and the advisor handed him a 12-inch ruler. "What's this for?" the client asked. The advisor said that the ruler was of course needed to measure the distance. The client not surprisingly responded by saying it would make a lot more sense to just use the car's odometer. "Exactly," the advisor said. "It makes no more sense to measure mutual fund performance on a daily basis than it does to measure the distance from here to your house with a ruler."

Long-term investing is a marathon not a sprint. It may be a lot of fun to extrapolate one good year's return, or some percentage thereof, over the next thirty years but it is extremely dangerous. Resist the urge. DON'T DO IT!! You wouldn't try to walk across a river just because it had an average depth of four feet would you? One of the greatest comforts long-term diversified investors' should enjoy is the sense of well being of knowing that short-term market movements are largely meaningless and have little if any impact on their ability to reach their financial goals. The fruit of prudent responsible investing is peace of mind. Enjoy it!!