Every year you should compare your portfolio performance to the S&P. Typically it will be 5 percentage points below the S&P.

You can greatly improve your performance by selling your worst 10% of the portfolio and buying TQQQ. The worst 10% of your portfolio is probably about 30% below the S&P. Making this change will add about 8 percentage points per year to your portfolio’s performance.

Relative performance allows you the ability to quickly compare all available investment options to see what is your best option. I like to use 15 year performance as the timeframe for comparison because I am looking for buy and hold investments. Very few investments are more than 2 percentage points above the S&P after commissions and fees.

Relative performance is how cap weighted ETFs constantly reweight their holdings.

Relative performance is easily calculated by subtracting the S&P return over the timeframe from the investment return. Returns are calculated by dividing the current price by the price X years ago and raising that price ratio to the 1 over X power. Subtract one from the result and multiply by 100 to get the return.

Using relative performance will quickly drive you to investing in either the S&P or the Stars model with a relative performance of 19.