Taming the need for constant change. Most investors desire a balanced approach, spreading risk across sectors and asset classes that complement each other over time. Unfortunately, all too often investors want to spread risk, but have little insight into the pros and cons of a balanced portfolio – especially in the short-term. A little insight can help long-term investors prevent short-term results from leading them astray. 10 Ways the Performance of an Efficient Portfolio can be Misunderstood 1. Comparing a balanced portfolio against the wrong benchmark(s). When investors compare a balanced portfolio’s short-term returns compared to a benchmark like the S&P 500. During a rally in large-cap stocks, the 100% large-cap stock S&P 500 is almost always going to outperform a balanced portfolio that includes bonds and smaller stocks. Even so, a large-cap rally makes many investors want to increase their large-cap position – even if those assets are overheated. 2. Misunderstanding how short-term results impact average returns. As sectors move up and down over the years, the results affect the 3-, 5-, and 7-year average returns and can mislead investors into changing their strategies.