How to Measure Your Investment Performance

As the fall semester draws to a close at Seton Hall University (where I teach), it's time for me to submit grades for my students' performance. This is never an easy process. However, what I have found in academia and in my role as a registered investment advisor at LakeView Asset Management is that it is necessary to devise an objective measure of performance.

Many installments of The Finance Professor mention the concepts of investment performance measurement and investor accountability. Now I will elaborate on those notions by discussing an essential guide to investment-performance measurement. Here is what is necessary:

Define a Time Horizon

Investors will typically judge their performance on an annual basis. However, you may decide to divide an annual period into quarters and maybe even months. ...