One mistake you want to avoid is measuring
the performance of one asset class or subclass against the benchmark
of another. For example, let's say that one year the Russell
2000 Index — the benchmark for small-cap stocks — gained 12% but
your individual blue chip stock holdings gained an average of
only 2%.
While the Russell 2000 can tell you something
about the overall performance of small-caps,
it can tell you very little about the performance of your blue
chip portfolio in comparison to the rest of the large-cap market. Indeed, from one year to the next, large-cap and small-cap
stocks can significantly outperform each other — which is
why it can be smart to own both in your portfolio.
To get an accurate sense of how your large-cap
investments are doing, you would have to measure them against
a large-cap benchmark, such as the S&P 500 or the Dow.
Jeremy Siegel, The Wharton School 