I use two methods of measuring performance for the Stars buy and hold strategy.

First, I use relative performance for all investment ideas I come across that are of a different type or very high performance. The second measure I use is I compare Stars to the average performance of Berkshire Hathaway, Blackrock, and Blackstone in order to see how Stars compares to a typical portfolio.

I chose Berkshire Hathaway because it is a value approach that has a long history. I chose Blackrock because it is a more typical type of portfolio. Its stock price is a measure of the assets under management and their performance. I chose Blackstone because of its reputation for alternative investments.

Over the past 16 months since the publication of the book about the Stars buy and hold strategy, Stars has outperformed the S&P by 20% and the average of the three investments has underperformed the S&P by 21%. It takes a 52% increase in the three investments to equal the performance of Stars.

As important as outperformance is, eliminating underperformance is more important. It is harder to find investments that outperform the S&P. Eliminating underperformance is easy. You just sell your worst performers. The best approach for a long term investment portfolio is to sell your worst performers and buy an out performer such as SPY or TQQQ.

Eliminating underperformance is often more important because what you get rid of is likely to have a performance that is 30% below the S&P whereas what you add at most is probably only 20% above the S&P.

Every year you should sell your worst 10% of portfolio and buy TQQQ. The incentive to do this is about 80% on that 10% slice of the portfolio.