On Comparing Returns
Why your friend's returns are irrelevant to your wealth.
On Comparison
Key Takeaways
- 60% of people experience money envy, and seeing someone else’s gains triggers the same brain regions as physical pain. Your nervous system treats their win as your loss
- Investors who chase strategies after seeing others succeed typically buy near peaks and abandon ship during drawdowns, capturing the worst of both worlds
- Your friend’s 300% return came with 60% drawdowns you couldn’t stomach. Different risk tolerances mean different journeys, and comparing endpoints without comparing paths is meaningless
The Uncomfortable Feeling
Someone posts their portfolio returns. Up 338% on a single stock. You feel a pang. Something uncomfortable you can’t quite place.
You know better. You have a plan. You’ve read about behavioral finance. None of that matters in the moment. Your brain has registered a signal: someone in your group has more resources than you. That feeling isn’t rational. It’s an old instinct that doesn’t fit the modern world.
About 60% of people have experienced money envy. The number is probably higher, since most won’t admit it. And that envy is doing real damage to real portfolios.
Why Comparison Hurts So Much
Your brain treats someone else’s financial success as surprisingly important. Neuroimaging studies show that social comparison activates the anterior cingulate cortex, a region associated with processing discomfort.
Modern investing isn’t zero-sum. Your friend making money on a tech stock doesn’t take money from you. The market isn’t a fixed pie. But your brain doesn’t know that. It still runs the old software: their gain feels like your loss.
The Highlight Reel Problem
You’re comparing your behind-the-scenes to everyone else’s highlight reel.
When someone posts a 300% gain, you don’t see the context. You don’t see the position sizing (maybe it was 2% of their portfolio, not a meaningful bet). You don’t see the losses they don’t post. You don’t see the sleepless nights during the 60% drawdown before the recovery. You don’t see the nine other speculative bets that went to zero.
Social media has made this worse. Every platform is optimized for engagement, and nothing engages like spectacular gains. Losses don’t get posted. Boring diversified portfolios don’t go viral. What you see is a systematically distorted picture of what investing actually looks like.
You’re comparing your full portfolio (the diversified, sensible, occasionally boring one) to the single best trade someone cherry-picked to share. That comparison was never fair.
Different Risk Tolerances, Different Journeys
Here’s what comparison ignores: you couldn’t have held that position.
Your friend made 300% because they held through a 60% drawdown. Could you have done that? Be honest. When your portfolio drops 60%, do you hold steady or do you panic sell at the bottom?
Most people can’t tolerate that volatility. The data proves it: investors consistently underperform the very funds they invest in because they buy after gains and sell after losses. They can’t stomach the ride.
Your friend’s return required your friend’s risk tolerance, your friend’s timeline, your friend’s financial cushion, and your friend’s psychological makeup. You have different versions of all of those. Comparing your endpoints without comparing your paths is meaningless.
A 7% annual return you can actually hold beats a 15% annual return you’ll panic-sell out of during the first correction.
The Strategy-Hopping Trap
Comparison doesn’t just feel uncomfortable. It reduces returns through strategy-hopping.
The pattern repeats constantly. You have a reasonable strategy, maybe index funds, maybe dividend investing, maybe a balanced portfolio. It’s working fine. Then you see someone crushing it with growth stocks. Or crypto. Or options. Or whatever’s hot this quarter.
You feel the pull. Your strategy suddenly seems inadequate. You abandon it, partially or completely, and chase what’s working for others.
Here’s what happens next: you buy near the peak, after the gains have already happened. Then comes the inevitable correction. You experience the drawdown without having experienced the gains that preceded it. You panic. You sell. You lock in losses. Then you look for the next hot strategy and repeat the cycle.
This is how investors underperform the market by 4-5% annually. Not through bad stock picks. Through strategy-hopping driven by comparison.
The investors who build wealth are boring. They pick a reasonable approach and stick with it for decades. They don’t chase what’s working for others. They trust their own plan.
Your Only Benchmark
Here’s the reframe that changes everything: your only benchmark is your own goal.
Not your friend’s returns. Not the S&P 500. Not whatever’s trending on financial Twitter. Your goal.
Are you trying to retire at 60 with €1.2 million? Then the only question that matters is: are you on track? If you’re 40 with €400,000 and contributing consistently, you’re probably fine. The market could be up 30% this year. Your friend could be up 300%. Neither changes whether you’re on track.
When you measure against your goal instead of against others, comparison loses its power. Your friend’s returns become genuinely irrelevant, not through willpower, but because they don’t actually matter for your situation.
Practical Defenses Against Comparison
Curate your information diet. Unfollow accounts that post gains. Mute the group chats where people brag about returns. You can’t control the comparison instinct, but you can control how often you trigger it. Every piece of investment content you consume either helps your long-term wealth or hurts it. Filter ruthlessly.
Ask the risk tolerance question. When you see someone else’s gains, ask: could I have held through the drawdowns required to get there? Usually the honest answer is no. And if you couldn’t have held, those gains were never available to you anyway. Comparing yourself to returns you couldn’t have captured is pointless.
Run your own race, literally. Define your goal in specific terms. Write it down. Calculate what you need to contribute and what return you need to hit it. Then track that, and only that. When comparison strikes, pull up your goal tracker. Are you on track? If yes, nothing else matters.
Use comparison constructively, if at all. The only useful comparison is to your past self. Are you saving more than last year? Is your net worth higher? Are your investing habits better? This is progress you actually control.
The Long View
In ten years, you won’t remember what your friend made on that one trade. You won’t remember the hot stock you didn’t buy. You won’t remember the crypto gains you missed.
What you’ll have is the wealth you actually built. And that wealth will come from doing the boring thing consistently: saving, investing in diversified assets, not panicking, not chasing, not comparing.
Your friend’s returns are irrelevant to your wealth. Your plan is what matters. Stick to it.
Gallio tracks your progress toward your own goals, not how you compare to benchmarks or other investors. When you know you’re on track, what others earn becomes irrelevant.
On Comparison
Key Takeaways
- 60% of people experience money envy, and seeing someone else’s gains triggers the same brain regions as physical pain. Your nervous system treats their win as your loss
- Investors who chase strategies after seeing others succeed typically buy near peaks and abandon ship during drawdowns, capturing the worst of both worlds
- Your friend’s 300% return came with 60% drawdowns you couldn’t stomach. Different risk tolerances mean different journeys, and comparing endpoints without comparing paths is meaningless
The Uncomfortable Feeling
Someone posts their portfolio returns. Up 338% on a single stock. You feel a pang. Something uncomfortable you can’t quite place.
You know better. You have a plan. You’ve read about behavioral finance. None of that matters in the moment. Your brain has registered a signal: someone in your group has more resources than you. That feeling isn’t rational. It’s an old instinct that doesn’t fit the modern world.
About 60% of people have experienced money envy. The number is probably higher, since most won’t admit it. And that envy is doing real damage to real portfolios.
Why Comparison Hurts So Much
Your brain treats someone else’s financial success as surprisingly important. Neuroimaging studies show that social comparison activates the anterior cingulate cortex, a region associated with processing discomfort.
Modern investing isn’t zero-sum. Your friend making money on a tech stock doesn’t take money from you. The market isn’t a fixed pie. But your brain doesn’t know that. It still runs the old software: their gain feels like your loss.
The Highlight Reel Problem
You’re comparing your behind-the-scenes to everyone else’s highlight reel.
When someone posts a 300% gain, you don’t see the context. You don’t see the position sizing (maybe it was 2% of their portfolio, not a meaningful bet). You don’t see the losses they don’t post. You don’t see the sleepless nights during the 60% drawdown before the recovery. You don’t see the nine other speculative bets that went to zero.
Social media has made this worse. Every platform is optimized for engagement, and nothing engages like spectacular gains. Losses don’t get posted. Boring diversified portfolios don’t go viral. What you see is a systematically distorted picture of what investing actually looks like.
You’re comparing your full portfolio (the diversified, sensible, occasionally boring one) to the single best trade someone cherry-picked to share. That comparison was never fair.
Different Risk Tolerances, Different Journeys
Here’s what comparison ignores: you couldn’t have held that position.
Your friend made 300% because they held through a 60% drawdown. Could you have done that? Be honest. When your portfolio drops 60%, do you hold steady or do you panic sell at the bottom?
Most people can’t tolerate that volatility. The data proves it: investors consistently underperform the very funds they invest in because they buy after gains and sell after losses. They can’t stomach the ride.
Your friend’s return required your friend’s risk tolerance, your friend’s timeline, your friend’s financial cushion, and your friend’s psychological makeup. You have different versions of all of those. Comparing your endpoints without comparing your paths is meaningless.
A 7% annual return you can actually hold beats a 15% annual return you’ll panic-sell out of during the first correction.
The Strategy-Hopping Trap
Comparison doesn’t just feel uncomfortable. It reduces returns through strategy-hopping.
The pattern repeats constantly. You have a reasonable strategy, maybe index funds, maybe dividend investing, maybe a balanced portfolio. It’s working fine. Then you see someone crushing it with growth stocks. Or crypto. Or options. Or whatever’s hot this quarter.
You feel the pull. Your strategy suddenly seems inadequate. You abandon it, partially or completely, and chase what’s working for others.
Here’s what happens next: you buy near the peak, after the gains have already happened. Then comes the inevitable correction. You experience the drawdown without having experienced the gains that preceded it. You panic. You sell. You lock in losses. Then you look for the next hot strategy and repeat the cycle.
This is how investors underperform the market by 4-5% annually. Not through bad stock picks. Through strategy-hopping driven by comparison.
The investors who build wealth are boring. They pick a reasonable approach and stick with it for decades. They don’t chase what’s working for others. They trust their own plan.
Your Only Benchmark
Here’s the reframe that changes everything: your only benchmark is your own goal.
Not your friend’s returns. Not the S&P 500. Not whatever’s trending on financial Twitter. Your goal.
Are you trying to retire at 60 with €1.2 million? Then the only question that matters is: are you on track? If you’re 40 with €400,000 and contributing consistently, you’re probably fine. The market could be up 30% this year. Your friend could be up 300%. Neither changes whether you’re on track.
When you measure against your goal instead of against others, comparison loses its power. Your friend’s returns become genuinely irrelevant, not through willpower, but because they don’t actually matter for your situation.
Practical Defenses Against Comparison
Curate your information diet. Unfollow accounts that post gains. Mute the group chats where people brag about returns. You can’t control the comparison instinct, but you can control how often you trigger it. Every piece of investment content you consume either helps your long-term wealth or hurts it. Filter ruthlessly.
Ask the risk tolerance question. When you see someone else’s gains, ask: could I have held through the drawdowns required to get there? Usually the honest answer is no. And if you couldn’t have held, those gains were never available to you anyway. Comparing yourself to returns you couldn’t have captured is pointless.
Run your own race, literally. Define your goal in specific terms. Write it down. Calculate what you need to contribute and what return you need to hit it. Then track that, and only that. When comparison strikes, pull up your goal tracker. Are you on track? If yes, nothing else matters.
Use comparison constructively, if at all. The only useful comparison is to your past self. Are you saving more than last year? Is your net worth higher? Are your investing habits better? This is progress you actually control.
The Long View
In ten years, you won’t remember what your friend made on that one trade. You won’t remember the hot stock you didn’t buy. You won’t remember the crypto gains you missed.
What you’ll have is the wealth you actually built. And that wealth will come from doing the boring thing consistently: saving, investing in diversified assets, not panicking, not chasing, not comparing.
Your friend’s returns are irrelevant to your wealth. Your plan is what matters. Stick to it.
Gallio tracks your progress toward your own goals, not how you compare to benchmarks or other investors. When you know you’re on track, what others earn becomes irrelevant.