Hi James, yes, that's actually very good advice: one should establish a reference point at the onset of building a system. Value propositions presented by various system enhancements can then be ranked based on the [%age movement towards reference point to incremental $ investment] ratio. The proposition with the highest ratio should be chosen as the most logical improvement.
In practice of course, there are difficulties. Firstly, a reference point is decidedly fickle: e.g. saying that one wants a system with 'a smooth, open mid-range, that's easy on the ears' leaves too much margin for subjectivity. So I personally choose 'the sound of live, unamplified voices and musical instruments playing in my room' as a more tangible, although practically unattainable reference (and I admit that getting a Cary pre was an illogical and emotionally driven decision given this reference!
). Such references are also severely prone to diminishing marginal returns due to the limits of available technology, and deciding on an investment cut-off point is also highly subjective: a mid-fi sony system will almost invariably be a better value proposition than an active pmc system for example.
The second pervasive issue of course is that, due to the esoteric nature of the high-end market, it is practically very difficult to be aware of and audition the available universe of equipment within one's system and budgetary constraints, plus the issue of incorporating items like warranty, customer service, resale value etc. into one's decisions presents additional variables that are difficult to quantify.
I guess given these issues, the hifi market continues to be driven as much by subjectivity and emotion as it is by 'rational' decision making.
