Quarterly and Annual Reviews of Returns

While I began this step with identifying the problem of investors focusing on short-term returns, they still should regularly review and benchmark the performance of their portfolio with an understanding of the contribution of the components to the total portfolio return. These reviews should be geared only towards understanding what occurred and should refrain from turning into a “market outlook” or a “portfolio recommendation.” As we learned in Step 4, there is no “going up” or “going down” with financial markets. There is only “gone up” or “gone down.” With rare exceptions, a change in a well thought-out asset allocation should only be in response to changes in the investor’s circumstances that affect his or her risk capacity. This will be discussed in greater detail in Step 10.

Step 9History