Assessing the performance of an investment is like being a coach for a sports team - you have to keep an eye on both the individual players and the overall game strategy. Being a tech CEO, I mostly look at the Price-Earnings (P/E) Ratio. It's a tool that acts as a scout, giving an idea of what the price should be relative to the earnings. It helps to determine if the investment is underpriced or overpriced. This way, I can strategize and make informed decisions, just like a coach would for his team. In this high-stake game of investments, P/E ratio is my MVP.
You should use an appropriate benchmark for each investment that you're analyzing. For example, if you're analyzing the performance of a portfolio of US stocks you could compare its growth rate to the S&P 500 index. But if you're analyzing the performance of a bond portfolio it would be more useful to compare it to a bond index instead.
When assessing the performance of an investment, it is crucial to understand what the investor's time horizon is for this particular investment as well their risk tolerance. Any investment can have a bad year or two, so it's important to understand why an investor owns a particular position and how it compares to its benchmarks and similar options. One great metric for risk management is to find out how an investment fared in its worst years compared to its best years to get a sense of the range of potential returns. This may not be possible for a new asset class, which means an investor should proceed with extra caution.