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Comparison Bias

The election is over by the time you are reading this.  However, I am writing on November 1, the Sunday before the election and after October’s stock market performance.

Last week, on Thursday, a friend asked me if the market had gone up that day?  I said yes.  She wanted to know how much because it needed to make up for the loss of the previous day.   I feel the need to comment that this friend is very important to me.  She has been with me longer than any other friend and I hope is with me longer in the future than any other client.  I am referring to Kathy, my wife.

Often it is easy to lose sight of the bigger picture.  Our reaction to events in life are often different depending upon our point of reference.  One person could be frustrated with their weight, especially, if their basis for comparison is their weight at high school graduation or when they were running marathons.  Another person with the same build and weight could be very happy in their current condition if they had recently lost ten or twenty pounds.

I get frustrated that I cannot hike the distances and carry the weight that was easy at one time.  Plus, altitude is much more of a challenge.  I remember what it was like “back in the day.”   But then I am reminded of so many that are unable to do even a fraction of my physical activity and I feel fortunate.   

All of this is called “comparison bias.” 

Was the stock market up or down in October?  How about year-to-date?  What about the last twelve months?

When you think about October 2020, where do your thoughts go?  Stock market?  Increasing cases and death due to COVID-19?  The election?  Family / relationship issues?  Are you willing to accept the world as it is now?  Or do you yearn for a different / better time in the past?  Are the things “bothering you” something you have control over?  If yes, what are you doing about it?  If no, why is it so concerning?  Or better, what can you do to be less affected by things out of your control?

Back to the stock market.  The S&P 500 was down 5.6% for the last week of October. 

  • But for the month, down only 3%. (1)
  • YTD, the S&P is down….guess now?  1%.   Yes one percent through October 30. (1)
  • Since March 23 how much is the market up?  Hold onto your hat….up 46%. (1)
  • Over the last twelve months (Oct 31 2019 to Oct 31, 2020) up 7.6%. (1)
  • Over the past five years: average annual return is up 9.46%. (1)
  • Over the past ten years:  up 10.7% / yr average annual return. (1)
  • Over the past twenty years:  up 4.77% / yr average annual return. (1)
  • Over the past thirty years:   up 8.03% / yr average annual return.  (1)
  • Over the past fifty years:  up 7.52% / yr average annual return (1).

What is your time reference?  Bias affects perception / outlook / and often our attitude.  Regarding the stock market, if your bias is short-term, you are setting yourself up for frustration and emotional anxiety.  If your bias is longer term and your point of reference longer, it is easier to be more relaxed and less affected by the day-to-day, month-to month market volatility.  Also, your attitude toward current events become less fatalistic. 

Remember, these numbers are the performance of the S&P 500.  Not your portfolio.  Your investments could be very different.  Often, advisors will tailor your investment portfolio to match your tolerance for volatility and financial planning goals which include considering when you will need money to spend and appreciation for long-term future spending.

Investment return is only a portion of your financial plan.  It is a bit like one of the components a complex structure such as an airplane, computer, building, or even a geodesic dome (2).   As with many things in life, nothing is isolated, happens in a vacuum, or is solely responsible for success or failure.  Your financial plan, in many ways, is at the same time simple, yet complex.  It has multiple moving parts.  Investment selection is only part of the plan.  You can be your own greatest asset or your own worst enemy with decisions you make.

Call me with questions, comments or to discuss your investments and financial plan.


  1. https://finance.yahoo.com/quote/%5EGSPC/history?period1=-1325635200&period2=1604188800&interval=1mo&filter=history&frequency=1mo&includeAdjustedClose=true
    1. The S&P 500 is a weighted index of 500 U.S. public companies.  The index is often used to measure the overall performance of the stock market.  You cannot invest directly in the index.  Past performance is not an indication or guarantee of future performance.
  2. https://www.bfi.org/about-fuller/big-ideas/geodesic-domes


  Investment Advisor Representative and Registered Representative of, and Securities and Investment advisory services offered through Voya Financial Advisors, Inc. (member SIPC)    


The views and opinions expressed are those of the author, and the information should not be construed as individual investment advice, or as the opinion(s) of Voya Financial Advisors.  CN1396385_1122