7. What index is the best performance benchmark for this portfolio and why?

We try to do three things for our clients: preserve their capital, earn them a decent return, and help them sleep at night with what we are doing. We think a decent return should be AT LEAST 5% after taxes and inflation. So, we focus on trying to earn after tax, after inflation returns of at least 5% annualized over any three-year period. That is our benchmark.

We find it most useful to ignore indices in order to meet those objectives. Frankly, beating an index over time only results from ignoring all the indices. Since we do not restrict our universe by market cap or by investment style we think the broadest possible index is most appropriate.