How To Measure Your Portfolio in Uncertain Times
Too often during uncertain times, we inadvertently compare ourselves to the people around us – and that leads us to make financial mistakes.
In his book Predictably Irrational: The Hidden Forces That Shape Our Decisions, Dan Ariely remarks, “We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.” Later he adds, “We not only tend to compare things with one another but also tend to focus on comparing things that are easily comparable.”
In other words, we use completely irrelevant benchmarks to gauge our success and make decisions. We compare the car we drive or clothes we wear to our siblings. We draw comparisons about how our children act relative to the neighbors