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Lou Mercer on Reviewing Trade Performance

Lou Mercer discusses his thoughts on reviewing trade performance.

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It's extremely important to evaluate your trading performance so you know how well you're doing. What we want to do is we want to take a look at an overall benchmark or an index and then compare how well we're doing to that benchmark or the index to see if we're outperforming or underperforming the market. What we want to avoid doing is being up, let's say, 15- or 20 percent and feeling real good about our trading when the markets are up close to 30%, if not more. Also, on those real bad years, like in 2008, when the market was down 20-something percent, if we were only down, let's say, 2- or 3 percent, even though we were down, we outperformed the market. So what a lot of clients will do is they'll compare their returns to the returns of a different benchmark, like the S&P 500, to see if they're outperforming or underperforming the market.

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Important Disclosures

Past performance is no guarantee of future results.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

This discussion is provided for illustrative purposes only.

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