Beware of 20 Percent Returns: 5 Ways to Separate Superior Performance from Salesmanship
Over the last month, I've been hearing countless financial professionals boasting of 17-20 percent returns over the last three years. And like anyone, I was amazed. Until I did the math.
NASDAQ has doubled since 2009, putting the annualized return at 25 percent over the past four years -- meaning anything below that is performing below the general market! Also, the three-year performance metrix is conveniently shaved to exclude the Great Recession. Most people bragging about 20 percent gains are covering up the fact that their clients lost way too much during the Great Recession and are still underwater -- even with a robust bull market.
So, rather than being wowed by what is basically a market recovery, sober up and examine the data that really matters. Today's bull has been (and will continue to be) a bucking bronco that has left most riders bruised, broken, weary and rattled.