{"id":1278,"date":"2023-05-28T12:55:09","date_gmt":"2023-05-28T09:55:09","guid":{"rendered":"https:\/\/beatmarket.com\/blog\/?p=1278"},"modified":"2024-03-15T12:24:26","modified_gmt":"2024-03-15T09:24:26","slug":"run-index-run","status":"publish","type":"post","link":"https:\/\/beatmarket.com\/blog\/run-index-run\/","title":{"rendered":"Run, index, run"},"content":{"rendered":"<div class=\"fpm_start\"><\/div>\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_45_2 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/beatmarket.com\/blog\/run-index-run\/#Why_I_will_never_catch_up_with_the_index_but_its_not_the_first_month_ahead\" title=\"Why I will never catch up with the index, but it&#8217;s not the first month ahead\">Why I will never catch up with the index, but it&#8217;s not the first month ahead<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/beatmarket.com\/blog\/run-index-run\/#What_am_I_doing\" title=\"What am I doing\">What am I doing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/beatmarket.com\/blog\/run-index-run\/#What_are_the_differences\" title=\"What are the differences\">What are the differences<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/beatmarket.com\/blog\/run-index-run\/#How_to_avoid_distortion\" title=\"How to avoid distortion\">How to avoid distortion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/beatmarket.com\/blog\/run-index-run\/#And_conclusions\" title=\"And conclusions\">And conclusions<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_I_will_never_catch_up_with_the_index_but_its_not_the_first_month_ahead\"><\/span>Why I will never catch up with the index, but it&#8217;s not the first month ahead<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As an experienced equities investor, I&#8217;d like to discuss a common issue that arises when comparing portfolio returns to the performance of an index. I manage a public portfolio for the BitMarket project, which shows my deals, returns, dividend yields, and other indicators. While analyzing the returns of my portfolio and comparing them to an index, I have noticed a difference in returns that needs to be addressed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_am_I_doing\"><\/span>What am I doing<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In my public portfolio, I select highly rated stocks and build strategies based on this approach. To demonstrate the effectiveness of this strategy, I created a clone of my portfolio, which mirrors the investment amounts and transaction days. The clone is similar to an ETF on the SP500 index. When comparing the returns of both portfolios, it appears that the index strategy has a higher return in percentage terms. However, the amount of money in my BeatMarket portfolio is greater than that in the clone.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_differences\"><\/span>What are the differences<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>This difference in returns is due to a common trap of calculating returns of multiple services or the often-used comparison model. When regularly reinvested funds are taken into account, the yield in percentage terms is also averaged, and it is particularly noticeable during the portfolio&#8217;s growth phase. In other words, it is possible to show a lower percentage return than the index but still have more money according to investment results.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_avoid_distortion\"><\/span>How to avoid distortion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To avoid such distortions, I run two strategies and ensure that all figures are visible and can be checked. At BitMarket, we also prepare calculations that take dividend reinvestment into account and consider such things when managing the portfolio. Currently, my portfolio is ahead of the index by a small amount, but those who have been following the portfolio since the beginning can see that the total amount is greater than the amount of similar investments in the index for the past eight months. The gap in dividend payouts is also steadily growing, which will undoubtedly affect further dynamics, taking into account reinvestment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"And_conclusions\"><\/span>And conclusions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Overall, I believe that the best way to compare portfolio returns to an index is to consider the total return, which includes reinvested <a href=\"https:\/\/beatmarket.com\/blog\/how-to-calculate-dividends\/\">dividends.<\/a> This approach provides a more accurate reflection of the actual performance of the portfolio and eliminates distortions in the comparison.<\/p><script data-noptimize>fpm_start( \"true\" )<\/script>\n\n<div class=\"fpm_end\"><\/div>","protected":false},"excerpt":{"rendered":"<p><a href=\"https:\/\/beatmarket.com\/blog\/run-index-run\/\" class=\"wp-block-post-excerpt__excerpt\">Why I will never catch up with the index, but it&#8217;s not the first month ahead<\/a><\/p>\n","protected":false},"author":1,"featured_media":1279,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[16,22,12],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to calculate portfolio return without distortion | Beatmarket<\/title>\n<meta name=\"description\" content=\"How to compare portfolio returns to an index and avoid distortion in calculation of return.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/beatmarket.com\/blog\/run-index-run\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to calculate portfolio return without distortion | Beatmarket\" \/>\n<meta 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\/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"How to calculate portfolio return without distortion | Beatmarket","description":"How to compare portfolio returns to an index and avoid distortion in calculation of return.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/beatmarket.com\/blog\/run-index-run\/","og_locale":"en_US","og_type":"article","og_title":"How to calculate portfolio return without distortion | Beatmarket","og_description":"How to compare portfolio returns to an index and avoid distortion in calculation of return.","og_url":"https:\/\/beatmarket.com\/blog\/run-index-run\/","og_site_name":"Beatmarket Blog","article_published_time":"2023-05-28T09:55:09+00:00","article_modified_time":"2024-03-15T09:24:26+00:00","og_image":[{"width":1920,"height":960,"url":"https:\/\/beatmarket.com\/blog\/wp-content\/uploads\/2023\/05\/sc9.jpg","type":"image\/jpeg"}],"author":"CEO BeatMarket","twitter_card":"summary_large_image","twitter_misc":{"Written by":"CEO BeatMarket","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/beatmarket.com\/blog\/run-index-run\/","url":"https:\/\/beatmarket.com\/blog\/run-index-run\/","name":"How to calculate portfolio return without distortion | Beatmarket","isPartOf":{"@id":"https:\/\/beatmarket.com\/blog\/#website"},"datePublished":"2023-05-28T09:55:09+00:00","dateModified":"2024-03-15T09:24:26+00:00","author":{"@id":"https:\/\/beatmarket.com\/blog\/#\/schema\/person\/bc0e7ca6eb01313260aba2b3843c0caa"},"description":"How to compare portfolio returns to an index and avoid distortion in calculation of return.","breadcrumb":{"@id":"https:\/\/beatmarket.com\/blog\/run-index-run\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/beatmarket.com\/blog\/run-index-run\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/beatmarket.com\/blog\/run-index-run\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"BeatMarket","item":"https:\/\/beatmarket.com"},{"@type":"ListItem","position":2,"name":"Blog","item":"https:\/\/beatmarket.com\/blog\/"},{"@type":"ListItem","position":3,"name":"Run, index, run"}]},{"@type":"WebSite","@id":"https:\/\/beatmarket.com\/blog\/#website","url":"https:\/\/beatmarket.com\/blog\/","name":"Beatmarket Blog","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/beatmarket.com\/blog\/?s={search_term_string}"},"query-input":"required 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Let me tell you a few words about our philosophy. BeatMarket is a safe space for long-term investors who want to develop healthy investing habits. BeatMarket is created for people who ignore trades of the day, most active stocks signals, and speculation trading courses. Beginner investors will find a special set of BeatMarket tools that helps avoid common mistakes at the start of their investment journey. The platform makes stock research and portfolio Welcome to the community of professionals! Yours sincerely, CEO BeatMarket, investor, entrepreneur, Max Dividends About the Author Max Dividends Seasoned entrepreneur, dedicated father of three, and private investor specializing in high-yield dividend growth stocks.\u200b Professional Background \u2022 Entrepreneurial Ventures: Founded and managed over 10 successful businesses across IT, media, and retail sectors.\u200b \u2022 Investment Experience: Over 15 years of experience in investments, with a portfolio surpassing $1.5 million.\u200b Investment Journey \u2022 From Risk to Reliability: Max started his investing career more than 15 years ago like many\u2014chasing high returns through risky bets, speculative plays, and market timing. After hard-earned lessons and financial losses, he pivoted to a long-term strategy grounded in fundamentals, discipline, and compounding. \u2022 Current Portfolios: Today, Max manages several well-diversified dividend portfolios across U.S. and international markets, focused on high-yield stocks with a track record of annual dividend growth. His primary portfolio is valued at over $1.5 million and generates five figures in annual passive income. \u2022 Dividend-First Strategy: Max\u2019s core focus is building sustainable income through quality businesses\u2014think wide moats, strong free cash flow, and shareholder-friendly management. He follows strict rules around payout ratios, dividend consistency, and sector diversification. \u2022 Personal Milestones: - Fully living off dividends since his early 40s - Reinvests 100% of excess cash flow - Built an \u201cInflation-Proof Income Engine\u201d to withstand economic cycles \u2022 Goals: Max is on a mission to reach complete financial independence and retire before age 50. His broader goal? Help thousands of other investors achieve the same through no-BS education and timeless dividend principles. MaxDividends Strategy \u2022 Objective: To build a reliable passive income stream through strategic dividend investments, aiming for financial independence and early retirement.\u200b \u2022 Achievements: Began living off dividends by age 40, with plans to retire before 50.\u200b Publications \u2022 \ud83d\udcd8 I Love Dividends Why dividend investing isn\u2019t just smart \u2014 it\u2019s addictive. \u2022 \ud83d\udcd7 The 5 Rules of Timeless Dividend Investing A practical, no-fluff guide to building long-term wealth through dividends. \u2022 \ud83d\udcf0 MaxDividends on Substack Max's flagship publication where he shares deep dives, monthly income reports, and stock breakdowns. Read by thousands of serious dividend investors around the world.","sameAs":["http:\/\/91.232.105.158:8000"],"url":"https:\/\/beatmarket.com\/blog\/author\/admin\/"}]}},"_links":{"self":[{"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/posts\/1278"}],"collection":[{"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/comments?post=1278"}],"version-history":[{"count":2,"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/posts\/1278\/revisions"}],"predecessor-version":[{"id":1521,"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/posts\/1278\/revisions\/1521"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/media\/1279"}],"wp:attachment":[{"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/media?parent=1278"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/categories?post=1278"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/beatmarket.com\/blog\/wp-json\/wp\/v2\/tags?post=1278"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}