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In the Markets Now - A Back-To-Basics Approach Thumbnail

In the Markets Now - A Back-To-Basics Approach

(Baird’s Ross Mayfield wrote the following piece in September 2022)


In a year like this one—rife with geopolitical conflict, market volatility, and economic uncertainty—it can pay dividends to return to basics. With that in mind, we created SHUTEYE, a broad, simple framework for how to approach investing and personal finance. 

Simplicity wins.

Overcomplexity introduces fragility, excess (and often hidden) costs, unanticipated consequences, and a dangerous illusion of control. Simplicity isn’t as exciting but it’s easier to understand, explain, and digest. As legendary investor Jack Bogle said, “The more complex the world around us becomes, the more simplicity we must seek in order to realize our financial goals. Simplicity is the master key to financial success.”

Have a plan.

A plan gives direction, creates calls to action, and focuses one’s mind. Control the controllables and concentrate on them relentlessly, especially when the market goes haywire. Optimize taxes, costs, fees, diversification, savings rate, and spending rate. Have a financial plan, an estate plan, a will, and a budget. Finally, control as best you can how much attention you give to the day-to-day volatility of the market. Remember, a goal without a plan is just a wish.

Uncertainty is the only certainty.

The world is an uncertain place that breaks all the time. There are always reasons not to invest—wars, crises, inflation, you name it—and yet the market has consistently marched higher over time. True certainty only comes with hindsight, and you can be sure that any forward-looking “certainty” will come at a high cost. (related article)

Time in the market over market timing.

Timing the market is difficult to get right with regularity, adds transaction costs and tax consequences, and invites the possibility of being uninvested during a bull run. On the flipside, long-term investing lets your money compound on itself and greatly increases odds of success: Over the last century, the S&P 500 has been positive for just over 50% of trading days. Look at all possible 15-year periods and the S&P 500 has been positive 100% of the time. 

Expect volatility, selloffs, and recessions.

Since 1944, there have been 13 recessions, 17 bear markets, and over 40 selloffs of at least 10%. The market is up roughly 400,000% anyway. Volatility and selloffs are merely the cost of entry to the long-term gains of the stock market. Expecting rather than fearing them can go a long way for both your financial goals and your happiness. (related article)

You are what you eat.

What you read, who you listen to, and what you watch informs who you are. Social media and the 24/7 news cycle are often bigger hinderances than helpers, especially given the overwhelming focus on short-term gratification over long-term satisfaction. (related article)

Emotions are the biggest risk to long-term success.

It’s impossible to reap the long-term benefits of investing if the short-term gyrations of the market keep you from doing so. The average investor actually underperforms the market, in large part due to poor decision making in critical moments. What to do when emotions are running high? Take a deep breath, stick to your plan, and lean on us for support.

Please note: Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index.