Processing Your Investment Underperformance

Some of the best investments of the 20th century, which include Johnson & Johnson, Abbott Labs, Coca-Cola, Clorox, and Wal-Mart, each have contained a five-year period when they underperformed the S&P 500 or Dow Jones (back when that was the most relevant benchmark available) but went on to outperform the index from a commencement date that preceded the period of underperformance.

It should be obvious to state, but if you own any collection of investments, a sometimes lengthy period of time will occur where you are either losing in value, underperforming a basket of other stocks, and/or encountering disappointment in some other manner. This period can last years, and sometimes, even five years to a decade of underperformance from a great investment is not out of the realm of possible experience.

Correctly processing underperformance or mediocre results is a condition precedent to a successful investing career.

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