WHAT IS THE CARROT SCORE ?

On Market Carrot, a lot revolves around a stat we call the "Carrot Score". In short, the Carrot Score is your investment performance compared to the performance of the S&P 500 Index benchmark. It is scored with 100 as the center. For each point below 100, you are underperforming the benchmark by an equal number of percentage points. For example, a Carrot Score of 98 means you are underperforming the benchmark by 2%. Conversely, a score of 102 means you are beating the benchmark by 2%. If you are entirely invested in a low-cost index fund which tracks the S&P 500 Index, for example, you would have a score very close to 100.

TWO LEGENDARY INVESTORS AND THEIR CARROT SCORES

For fun, we thought we'd take the performances of two of the greatest stock pickers ever, Warren Buffett and Peter Lynch, and calculate their Carrot Scores.

Before Warren Buffett became synonymous with Berkshire Hathaway, he ran several partnerships where he managed to beat the market 12 years in a row. The figures for Buffett below were taken from Roger Lowenstein's "Buffett, The Making of an American Capitalist".

Peter Lynch ran Fidelity'd Magellan Fund from 1977 to 1989. While at the helm, the Magellan Fund managed to outperform the market in 11 out of 13 years. If you had invested $1000 in the Magellan Fund when Lynch first took over, it would've grown to $28,000 by the time he left some thirteen years later.