Benchmarking: Play the Comparison Game the Right Way

Episode 011: Benchmarking – "Compared to What?"

Synopsis

In the conclusion of his series on data-driven living, Jared tackles the controversial topic of benchmarking. While we are often told that "comparison is the thief of joy," Jared argues that comparison is actually a vital diagnostic tool when used for the right reasons. Moving past the "middle school" comparison games of pride and victimhood, this episode provides a professional framework for using objective standards to determine your true trajectory. You will learn the difference between "Comparison Up" and "Comparison Down," the danger of the "Anti-Benchmark," and why the most powerful benchmark in your life portfolio is often yourself.

Detailed Sequential Outline

I. The Two Lenses of Unhealthy Comparison

(0:36) Comparing Up (Victimhood): Seeing yourself as inferior, oppressed, or perpetually behind. This lens traps the individual in a state of "poor mindset" where others’ success feels like a personal indictment.
(1:03) Comparing Down (Pride): Seeing yourself as superior or "ahead" of others to stroke the ego.
(1:19) Fused Lenses: If practiced long enough, these unhealthy lenses become "fused to our eye sockets," making it impossible to see reality objectively.

II. Defining Benchmarking: The "Compared to What?" Test

(4:03) Data Needs Context: Tracking and measuring give you numbers, but benchmarking determines what those numbers actually mean.
(4:46) Right vs. Wrong Reasons:
- Wrong: Pride, self-castigation, or jealousy disguised as "fairness." (Example: No one complains about fairness when they find out they are being overpaid).
- Right: Identifying necessary adjustments (Asset Allocation), setting trajectory, and learning.
(7:14) The Filter: Ask: "Compared to what?" and "For what purpose?" If you can't answer these, your comparison is likely just an unhealthy game.

III. Common Applications of Benchmarking

(7:52) Medicine: Blood pressure and cholesterol numbers are meaningless without benchmarks. However, Jared warns against "population-mean" benchmarks—comparing yourself to an unhealthy average can make you feel "fine" when you are actually at risk.
(10:41) Personal Finance: Jared provides specific benchmarks for financial health:
- The Housing Benchmark: Spending 20–25% of salary on housing is healthy; above 40% is a "big warning sign."
- Net Worth vs. Years Worked: A dollar amount ($100k) is impressive after one year, but unimpressive after a decade for a high-earner.

IV. Professional Portfolio Benchmarking

(11:51) The Custom Blend: Jared describes how he benchmarks high-net-worth portfolios. He uses a blend of the S&P 500 (Large Cap), S&P 600 (Small Cap), MSCI EAFE (International), Bond indices, and Cash.
(14:52) Relative Winning: A portfolio manager can be "winning" while the account is down 20% (if the market is down 40%). Conversely, being up 15% is a "loss" if the benchmark is up 20%.
(16:31) Avoiding Shenanigans: Be skeptical of managers who claim to beat the market every single year; they are likely moving the goalposts or "hiding in the crowd."

V. Pitfalls: Bad Benchmarks and the "Anti-Benchmark"

(17:44) Improper Standards: Using job titles as a benchmark for skill, or "busyness" as a benchmark for importance.
(20:06) The Anti-Benchmark Trap: This is the strategy of investing "not toward" something (e.g., "I will never be like my mother").
(21:18) The Result of "Not": This approach usually results in becoming a worse, slightly adjacent version of the thing you hate. You cannot build a life around a void. You must have a positive target to shoot for, not just a point to run from.

VI. Trajectory: The Most Valuable Line on the Map

(23:05) Drawing the Line: You need two points to create a trajectory.
- Point A: Where you are (revealed by Tracking and Measuring).
- Point B: Where you are going (determined by the Benchmark).
(23:43) Trajectory is King: Your current position (high or low) matters less than the direction of the line. A low point pointing up is better than a high point pointing down.

VII. Choosing Your Benchmark

(26:55) Objective Standards: Specific PRs, dollar amounts, or binary states (e.g., "debt-free").
(27:44) Peers: Useful for identifying if you are a "net contributor" on a team.
(28:43) The Safest Benchmark: Yourself: Compare yourself today to yourself yesterday. It avoids the pedestal of pride and the pit of envy while ensuring constant progress.
(29:26) The Changing Benchmark: Standards should evolve. Jared’s bike times from his 30s will be an "improper benchmark" for his 50s. We must raise the bar in some areas and re-evaluate it in others as we age.

VIII. The "I’ll Be Happy When..." Trap

(32:36) The Soul Void: Benchmarks cannot fill a void in the soul. Jared recounts a friend who achieved every goal but remained perpetually discontent because he moved the goalposts the moment he reached them.
(35:02) Setting the Bar Too High: Comparing your raw returns to Warren Buffett is demotivating. Instead, benchmark Buffett's Leading Indicators (his approach and discipline) rather than his Lagging Indicators (his billions).

IX. The Professional-Grade Mindset

(36:27) Exposure and Accountability: Hiding in the crowd is easy; being measured "to the basis point" takes guts.
(38:28) Insist on Judgment: Jared encourages listeners to put themselves in positions where their contributions are visible and measured. When you are judged on objective performance, you are forced to focus on results over "vibes."

X. Summary: The 5-Step Application

(40:40) Identify what you actually care about.
(41:14) Track and Measure those areas accurately.
(41:43) Focus on Leading Indicators (the process) rather than Lagging Indicators (the results).
(42:13) Set an Appropriate Benchmark (Peer, Best-in-class, or Yourself).
(42:38) Draw your Trajectory and take the steps to keep the line moving up.

Quotes to Remember

"I am not here to tell you to stop comparing. I am here to tell you to stop comparing like a middle schooler and start comparing like a portfolio manager."

"A lot of what we call 'fairness' is just jealousy with better branding."

"Numbers without benchmarks are just numbers. A number by itself doesn't tell us much; reference points give us the context we need to turn data into actionable information."

"Trajectory is king. A low point pointing up is infinitely better than a high point pointing down."

"You cannot build a life around a void. 'Not my dad' is not a useful life strategy."

"If you are never failing your bar, your benchmark is too low, and your trajectory is going to reflect that."

"The comparison game, as it's usually applied, will steal your joy. But the proper benchmark gives direction and can actually give joy."

Next Episode: Exploring the fundamental unit of action and the unlock to progress: reps.