Benchmark

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May 22, 2015 1:46 AM SINGAPORE, in its ambition to become a major liquefied natural gas (LNG) trading hub, could well become the key pricing benchmark of South-east Asia, said economics professor Peter Hartley.
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BRUSSELS (dpa-AFX) - The European Parliament on Tuesday agreed to proceed with negotiations on the European Commission's proposal to make benchmarks more reliable and less at risk of manipulation. The negotiations with the Council and the...
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Mondo Visione  May 13  Comment 
With effect from 1 June 2015, two companies will be removed from the index, while eight companies will be added to the index. Oslo Børs has revised the composition of the Benchmark Index (OSEBX). The number of companies included in the index...




 

Benchmark

A benchmark is a proxy for a market, economy, class of equity, or sector, generally setting a standard against which the performance of a stock, bond, mutual fund, commodity, or other security is measured.

Benchmarks are also used to gauge the health of a market, sector, or entire economy.

Examples

  • The S&P 500 (.SPX-E) and Dow Jones Industrial Average (.DJIA) are often used as benchmarks for the United States economy in general. That is to say, their performance is used both to gauge the health of the economy and as a reference of comparison for the performance of a stock portfolio or mutual fund.

Benchmark

A real benchmark |ˈbɛntʃˌmɑrk| is an unmovable surveyor's mark cut concrete or stone, and used as a reference point in measuring altitudes. There is no such thing as a floating benchmark. [1]

From an investors view, cash is used as a benchmark to gauge the returns on there principal, and governments use cash as a benchmark to levy there taxes on.

Wall Street uses benchmarks that they make up themselves to justify their fees. [1] Generally, the earnings multiple for the market as a whole is a helpful benchmark. [2] Benchmarks are a smokescreen used by Wall Street to distract investors from gauging their investment returns against cash. Comparisons are fraught with peril, because a fund can look unjustifiably good or bad if it is compared with the wrong index. [3] Investors are concerned with absolute, not relative risk and return. Minimizing risk is about diversification. [4]

From "surveyor's point of reference," 1838, [2]

References

  1. Wall Street words: an A to Z guide to investment terms for today's investor By David Logan Scott ISBN-10: 0618176519 pg364,<ref> The fee increases or decreases proportionately with the investment performance for the fund compared to the index. <ref>Mutual Funds: An Introduction to the Core Concepts by Dr. Mark Mobius ISBN-10: 0470821434 Chapter 1</li> <li id="_note-1">[[#_ref-1|↑]] A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing By Burton Gordon Malkiel ISBN-10: 0393062457 pg122</li> <li id="_note-2">[[#_ref-2|↑]] Mark Hulbert, New York Times, January 8, 2006</li> <li id="_note-3">[[#_ref-3|↑]] Dean LeBaron's Treasury of Investment Wisdom: 30 Great Investing Minds by Dean LeBaron and Romesh Vaitilingam ISBN-10: 0471152943 pg118</li></ol></ref>

See Also

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