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Greetings Tom,

As for the decision to compare our returns to the S&P, this is the benchmark applied to all professional money management.

I don't think so. Lots of Vanguard's funds are compared to more appropiate benchmarks so that if a fund is supposed to be a mid-cap value fund then it isn't about to be compared to a large-cap index, e.g. Vanguard Selected Value(VASVX) gets a performance fee based on how well it does against the Russell Mid-cap Value Index not the S & P 500. In fact, looking at this fund's literature I see that the Wilshire 5000 is listed and no mention of the S & P 500 at all so this is an example of professionally managed money that doesn't have the S & P 500 as its benchmark.

The simpler example would be to take the Vanguard index funds that don't follow the S & P 500 but I thought a look at active management would be better at driving home my point.

Our challenge, outlined in our Hidden Gems materials for all members to see, is to beat the market. Period.

The market should be the S & P SuperComposite 1500, Russell 3000, or Wilshire 5000 rather than just the S & P 500 I think.

Whether we chose to do it with biotech stocks exclusively or with large cap stocks or technology stocks or small cap stocks, the challenge remains the same: Beat the market.

Ah, but see if you do this with small cap stocks then you should also be compared to a small-cap index as this is how to track that asset class which is different from large-caps which would be represented by the S & P 500. In fact, some would argue that the S & P 500 is mostly large-cap growth as an asset class and that there is also large-cap value, small-cap growth, and small-cap value that represent different asset classes one should hold as a way to diversify. If you hold just small-cap stocks then comparing to a small-cap index may be better to see if you are really choosing amongst the best from this group rather than some subpar group.

Just my bits on this,

FD: I do own shares of Vanguard Selected Value(VASVX)
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