The Relative Performance Trick: How Charts Lie Without Lying
A Fundstrat chart on the Iran conflict looks bullish for crypto and energy. But the framing hides a bloodbath. Here's how relative performance charts mislead — and when they're actually useful.
The Chart That Caught My Eye
This Fundstrat chart has been circulating in macro circles. At first glance, it tells a compelling story: Ethereum is up nearly 17%, Energy surged 13%, and Bitcoin gained 12% since the start of the Iran conflict.
But read the subtitle carefully: "Relative to S&P 500." Those three words change everything. This chart doesn't show how much money you made or lost. It shows how much better or worse each asset did compared to the S&P 500. And if the S&P 500 itself dropped 12%… well, that +0.5% bar for Magnificent 7 is actually an 11.5% loss.
The chart is not technically wrong. But it is designed to tell a story — crypto and energy as wartime winners — while burying the reality that nearly everything on this list may have lost you money.
The Problem: Relative Hides the Pain
Let's make this concrete. The table below shows a simplified scenario using hypothetical numbers to illustrate the concept.
Relative performance charts answer the question: "What lost less?" They do not answer the question most people actually care about: "Did I make money?"
The Crypto "Outperformer" — Zoom Out
The Fundstrat chart places Ethereum at the very top (+16.9%) and Bitcoin fourth (+12.3%), framing both as wartime winners. But pull up the actual weekly charts and the picture is far less rosy. Both are in structural downtrends — and the war is only accelerating the damage.
Bitcoin: Already Weak Before the War
Bitcoin CME Futures currently sit around $69,225, already deep in a textbook ABC corrective structure from the $120K+ highs. The weekly chart shows the war (dashed line, Feb 23) arrived right as the C-leg was accelerating. If BTC continues its current trajectory and drops −24.26% from the war start, as the chart projects, we're looking at sub-$55K — while the Fundstrat chart would still be calling it an "outperformer."
The Fundstrat chart shows Bitcoin at +12.3% "relative to S&P." But if BTC drops −24.26% from the war start while the S&P falls −10.78%, Bitcoin becomes a −13.48% underperformer on a relative basis — the exact opposite of the Fundstrat narrative.
Ethereum: Heading for −22%?
Ethereum is in even worse shape. Currently trading around $2,067, ETH has been making repeated lower highs, with each rally attempt failing to reclaim previous support levels. The weekly chart projects a −22% decline from the war start if the current trajectory holds — threatening $2,000. What was support at $2,800 became resistance, and that resistance has already broken.
Yet the Fundstrat chart crowns Ethereum as the single best "outperformer" since the Iran conflict began, at +16.9% relative. But if ETH drops −22% while the S&P drops −11%, that's a −11% underperformance — not outperformance.
The Lesson: An asset can "outperform" and still destroy your capital. Relative performance tells you about ranking. Only absolute performance tells you about your actual money. When someone shows you a chart of "winners," always ask: winners compared to what? And at what cost?
What If the Selloff Continues?
The Fundstrat chart conveniently never tells you the S&P 500's own drawdown — the single most important number for context. Here's the SPY weekly chart. It has already broken below the rising channel from 2024, and the technical structure is pointing toward a −10.78% decline from the war start.
Now let's run a scenario. What if the selloff continues and the S&P drops −11%, Bitcoin drops −24%, and Ethereum drops −22% from the war start?
| Asset | Actual Return | Relative to S&P | Fundstrat Spin |
|---|
As the S&P drops further, the relative "outperformance" numbers get bigger — even though your actual losses stay exactly the same. An ETH investor who could lose 22% of their money would get relabelled as a "winner" simply because the benchmark fell more.
It Gets Worse: A Second Example
This trick isn't unique to the Iran conflict chart. It's everywhere in finance. Fund managers, analysts, and financial media routinely use relative framing to spin a loss into a win.
Example — Fund Manager "Alpha": When Losing Money Becomes Outperformance
| Metric | Fund A | Fund B | Benchmark |
|---|---|---|---|
| Actual Return | −8.0% | −18.0% | −15.0% |
| Relative to Benchmark | +7.0% | −3.0% | — |
| Marketing Claim | "Strong outperformance" | "Slight underperformance" | — |
| Your $100,000 | $92,000 | $82,000 | $85,000 |
Fund A genuinely did better than the benchmark — that part is true. But the investor still lost $8,000. The word "outperformance" triggers an emotional response that doesn't match reality. Your landlord doesn't accept relative alpha as rent.
Where Else You'll See This
Relative framing shows up constantly: a currency "strengthened" against the dollar while still losing purchasing power against real goods. A stock "outperformed its sector" while both fell 25%. A country's GDP "grew faster than peers" while still contracting in real terms. The technique is always the same — choose a weak benchmark, and anything looks good by comparison.
Three Red Flags to Watch For
Red Flag #1 — The Missing Benchmark Level: If a chart shows performance "relative to X" but doesn't tell you what X actually returned, be suspicious. The Fundstrat chart never states the S&P 500's own drawdown. That omission is doing a lot of heavy lifting.
Red Flag #2 — Bullish Language for Negative Outcomes: Words like "outperformer," "winner," and "resilient" in a chart title — paired with relative data — create a false impression. The headline says "outperformers." Your portfolio says "down 8%."
Red Flag #3 — Cherry-Picked Start Date: Relative performance is extremely sensitive to the chosen start date. Move the window by two weeks and the entire ranking can shuffle. Always ask: why this start date?
So When Should We Use Relative Performance?
Relative performance isn't inherently bad. It's a legitimate analytical tool — when used with transparency and for the right questions.
The common thread: relative performance is useful when the question is about relative positioning, not absolute wealth.
The next time someone shows you a "winner"
Next time you see a chart titled "outperformers" or "winners," scroll down to the subtitle. If you see "relative to" anything, pause. Ask what the benchmark itself did. Do the arithmetic. The story often changes. In macro, the ability to read between the chart lines isn't a bonus skill — it's a survival skill.
Common Questions
What is relative performance and how does it differ from absolute performance?
Relative performance measures how an asset performed compared to a benchmark, like the S&P 500. Absolute performance measures what you actually gained or lost in real money. An asset can "outperform" the S&P 500 by 10% and still leave you down 15% — because the benchmark itself fell 25%.
Why do financial charts use relative performance instead of showing real returns?
Relative performance is a legitimate analytical tool for comparing fund managers or sectors. But it's often used selectively to make losses look like wins. If your benchmark is falling, almost anything can be reframed as an "outperformer" — which is why you should always ask what the benchmark itself returned.
How should Malaysian investors read charts showing "outperformers"?
Always check the footnote for "relative to" language. If a chart shows performance relative to a benchmark, find out what that benchmark actually returned. A fund that "beat the FBM KLCI by 5%" may still be down 10% in ringgit terms. Your financial goal is absolute wealth, not relative rankings.
What are the red flags for misleading relative performance charts?
Three main red flags: (1) The benchmark's own return is missing from the chart — look for it. (2) Bullish language like "outperformer" or "winner" paired with relative data. (3) A cherry-picked start date — relative rankings are extremely sensitive to when the window begins.