Arbitrary though it may be, the 1st of January is nevertheless a date in which much store is now set, and the investment world is no different. Read any fund literature and past performance will be measured on a calendar year basis. And for the vast majority of companies it marks the start of a new trading year- and at that point the milestone ceases to be arbitrary and is instead cemented into the figures that we pay so much attention to, even if they can present a somewhat artificial version of trading.
But even arbitrarily set measurement periods do serve several useful purposes, not least that it removes the temptation for fund managers and executives to flatter performance by tinkering with reporting dates - because, even though they say statistics don’t lie, a few days here and there can sometimes make for a very different picture. So do the adjustments many companies insist upon making, but that’s an issue that – along with the continued thorny issue of executive pay – we will continue to explore in our newly relaunched No Free Lunch column (on page 20).
Indeed, consistency in reporting is important because it also allows us to benchmark companies and fund managers against each other. And even if you're a private investor and don't have to convince anyone else of your investing expertise, it’s good to unemotionally assess how well you’re doing for your own benefit. If you’re not beating the market you might want to ask yourself why and make some changes to your investment approach.
And although I've frequently advocated avoiding watching your investments too obsessively for danger of being sucked into superfluous trading activity, a degree of monitoring is important. As our regular contributor Todd Wenning explains on page 22, companies are constantly changing – which means an investment may no longer be doing for your portfolio what you thought it did, and your money could be put to better use elsewhere – although as Todd also notes, that reflection should be more regular than just once a year.
Sometimes, though, we do simply need a reminder to reflect on what we’ve got right and wrong, and, most importantly of all, why. And if the new year makes us do that then it is useful. In reflecting on his own predictions on page 16, Chris Dillow points out that it would be an unrealistic expectation that we get everything right. But regularly reappraising ourselves should eventually result in being more right than wrong, as Chris has been – and, incidentally, as have our 2016 weekly tips, which you’ll find listed in full on page 26.
