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Those who follow relativismme know that I’m not the biggest fan of Wall Street for the simple reason that the rules of their game are biased in their favor – and against the average investor.

So when I ran across a recent article – authored by a Wall Street muckity-muck – I couldn’t believe what I was reading.

Here’s what Larry D. Zimpleman, President, Chairman and Chief Executive Officer of Principal Financial Group has to say (shortened for brevity):

In my 40+ years in this business, I think the biggest thing investors overlook when analyzing fund returns is that they think about the absolute return of their funds without thinking about the relative return of their funds (i.e. how did their fund perform compared to how it should have performed?).

An example can help. Say you own a small-cap stock fund. You may have a year with a negative 20% return and be very disappointed. But if you look at the universe of small-cap funds and find that the overall small-cap universe had a negative 25% return for that period, your fund actually outperformed its universe (or it outperformed on a relative basis).

So it’s important that you always try to analyze returns against a comparable universe for that same time period. Ideally, you would do that comparison over an entire market cycle–which can be eight, 10 or more years.

Zimpleman is telling us we should feel good about a 20% loss (the actual return) – as long as funds in the rest of the sector performed worse (the relative return).

Meanwhile, back here on Mainstreet – a 20% loss feels pretty bad no matter what happened to the neighbor’s money. Try telling the mortgage company they should feel good when you short your payment because your portfolio was down 20% – by reminding them that their other customers are probably shorting their payments by more!

This is crazy. Wall Street has turned into a bunch of politicians – “hey – our guy is no worse than the guy that came before him.” News flash: both are bad!  Your parents didn’t care that your grade was better than Suzy’s – you shouldn’t care about relative returns when it comes to your money.

Actual returns are the only thing that matter – because actual returns show up on that statement – and actual returns solely determine the spendable cash we have to fund our needs, dreams, and aspirations.

If you needed more evidence of why I advocate getting your money out of harm’s way altogether (and I mean completely) – there you have it – right from the horse’s mouth.