Calm Waters Don’t Make Great Investors

“I don’t know what’s going to happen next.”

Not exactly the most comforting thing to hear from a financial advisor, right?

But it’s the truth.

It’s true for me.

It’s true for every advisor out there… even if we don’t always say it out loud.

What will the next election mean for the markets?

What happens with interest rates?

Will taxes go up?

Does the national debt finally matter… or not yet?

There’s no shortage of headlines, opinions, or “experts” confidently predicting what’s coming next.

But here’s the reality: no one knows for sure how any of these variables will impact the market in the short term.

And that uncertainty?

That’s not new. It just feels new every time we’re in it.

Let’s Start With Some Perspective

Before we go any further, let’s zoom out.

Since 1926:

• The S&P 500 has had positive returns over a 1-year period 74% of the time

• Over rolling 5-year periods, it’s been positive 87% of the time

• Over rolling 15-year periods, it’s been positive 100% of the time

Read that last one again.

100% of the time over a 15-year period.

Now, does that mean markets don’t go down? Of course not.

We’ve lived through plenty of those periods, and they never feel small when you’re in them.

But historically, expansions have been longer… and stronger… than contractions.

That’s the part most people forget when headlines are loud and portfolios are red over the short term.

The Real Risk Isn’t the Market

It’s how we react to it.

When uncertainty rises, our instincts kick in:

• “Maybe I should wait this out…”

• “Maybe I should move to cash…”

• “Maybe I’ll get back in when things feel better…”

The problem?

You have to be right twice.

Once when you sell, hopefully at the highs.

Second, buying back in, praying at the lows.

The sad truth…

By the time things feel better, markets have usually already moved higher from the bottom.

Some of the best days in the market happen very close to the worst days. Miss a handful of them, and long-term returns can look very different.

This is where investing can quietly shift from a disciplined strategy… to something that starts to resemble gambling.

Trying to outguess the market on a short-term basis is a tough game to win.

Planning for it? That’s a different story.

So What Can You Actually Control?

If we can’t predict the future, we need to build a plan that can handle multiple versions of it.

Here’s how we do that.

1. Build a “Sleep Well at Night” Bucket

For many of our retired clients, we keep 4–8 years of gap income needs in more stable assets like cash, CDs, structured notes, or bonds.

Why?

Because when markets go down, they don’t have to sell stocks at a discount.

They simply spend from the safer bucket and give their investments time to recover.

It’s not about avoiding volatility.

It’s about not being forced to react to it.

2. Don’t Turn Investing Into Market Timing

If your time horizon is 5 years or longer, history has been pretty clear.

You’ve had an 87% chance of success.

Those are odds I’m willing to take.

Patience isn’t flashy.

But it’s been one of the most reliable strategies investors have.

I can’t say it better than Warren Buffett, “It’s time in the market, not timing the market”.

3. Diversification Isn’t Boring—It’s Hedging

The numbers we talked about earlier are based on the S&P 500.

But real portfolios don’t (and shouldn’t) live in just one lane.

Owning different asset classes like: U.S. stocks, international stocks, bonds, etc. helps reduce the volatility ride.

Not eliminate the downs… but smooth it.

And sometimes, that smoother ride is the difference between staying invested… and hitting the red panic button at the wrong time.

4. Rebalancing: The Quiet Discipline That Works

Rebalancing is simple.

When stocks have done really well, you trim them back.

When they’ve struggled, you add to them.

It forces you to do what’s emotionally hard:

• Sell a little when things feel great

• Buy a little when things feel uncomfortable

Over time, this discipline helps manage risk and creates opportunity without trying to predict anything.

5. Think in Decades, Not Headlines

The market will always give us reasons to worry.

Always.

But great investors zoom out.

They understand that the question isn’t:

“What will the market do next week?”

It’s:

“Is my plan built to handle whatever comes next?”

Because a great investor doesn’t need to know what’s happening next week.

They need to be assured that probability is on their side for the next 10, 20, and 30 years.

Final Thought

Uncertainty isn’t something to avoid in investing.

It’s the price of admission.

But if your plan is built the right way with liquidity, diversification, and discipline, you don’t need market timing to be successful.

You just need a strategy that works in more than one scenario.

And the ability to stick with it when the news tells you the world is ending.

With that, here’s to thinking long term.

 And happy investing!

Photo

-            Marie’s first fishing trip

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual or firm.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.​ The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries and is an unmanaged index which cannot be invested into directly. Past performance is no guarantee of future results.