“You have to understand, most of these people are not ready to be unplugged. And many of them are so inured – so hopelessly dependent on the system – that they will fight to protect it.”

Sound familiar? That’s Morpheus explaining The Matrix to Neo in the 1999 film of the same name.

But could he be speaking of the S&P 500? Most of us have been so indoctrinated that our investments must match or beat the index that we blindly follow the bromide and will fight any effort to consider otherwise.

Morpheus continues, “The Matrix is a system, Neo. That system is our enemy. But when you’re inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy.”

Put another way if we are unwilling to let go of the idea of market returns as a barometer – THE barometer – then we will continue to be our own worst enemies.

Ask the average person how the stock market is doing and they’ll paraphrase some random headline they noticed while on their way to preorder the iPhone 6. The market is doing well. Stocks are at all-time highs. Corporate profits are strong. Yada yada yada.

Peel back the onion, however, and you’ll find more layers. While the S&P 500 has closed at new highs 34 times in 2014 about 47% of NASDAQ stocks are down 20% from their 12 month peaks while more than 40% of Russell 2000 stocks have fallen a similar amount.

There are a handful of stocks dominating market returns while the majority of companies are not participating in the raging kegger. The message is simple – markets are showing a preference for the relative safety of larger, more established companies while shunning the relatively riskier profiles of smaller, fast-growing companies with unstable and unpredictable earnings.

Of course this is all short-term thinking and cocktail party fodder. Pragmatic, long-term wealth management shuns such nonsense and focuses on comprehensive, interrelated strategies where investing is not an end in itself but a means to an end – an integral part of the earn/grow/protect/spend financial lifecycle encompassing cash flow, tax, retirement, insurance, estate/charity, etc.

Sadly many investors won’t make up their own minds. They’ll cling to their shortcuts – the investing version of the 5-star hotel rating. And they’ll get what they deserve. As Gordon Gekko said in Oliver Stone’s Wall Street, “Ever wonder why fund managers can’t beat the S&P 500? ‘Cause they’re sheep – and sheep get slaughtered.”