Category: Uncategorized

The Upside of Low Expectations

We all strive for favorable outcomes such as financial security, peace of mind, and evidence of progress. Naturally, we tend to approach situations with high expectations, especially when the stakes feel personal. But in many areas of life, dialing down our expectations can be a surprisingly effective way to boost our well-being.

Disappointment and Delight

Disappointment sets in when reality doesn’t meet our expectations. If we anticipate smooth sailing but hit turbulence—be it in travel, relationships, or markets—we’re more likely to feel frustrated or discouraged. By contrast, expecting challenges (like long airport lines or traffic delays) helps us stay grounded and reduces emotional friction when “life happens.” On the flip side, delight often comes when reality exceeds expectations. When we assume a situation will be difficult, but it turns out better than anticipated, we experience a welcome boost of satisfaction. Managing expectations isn’t about pessimism; it’s about making room for more moments of pleasant surprise. It’s especially helpful to assess how much influence we have in a given situation. When we have control, setting high standards can be motivating. But when outcomes are uncertain or outside our control, modest expectations are more realistic and less likely to result in disappointment.

Framing Investment Expectations

Investors often hope for strong returns with minimal bumps along the way. That’s understandable. But there’s a difference between our investment hopes and our investment expectations. If we expect smooth performance and steady growth, we’re setting ourselves up for frustration when markets fluctuate wildly, as they have done these past several months. But if we expect the journey to be bumpy and, at times undesirable, we’ll be less rattled when “markets happen.” In investing, the healthiest mindset tends to be one of long-term confidence paired with short-term humility. We can believe in the resilience of the market over time while still acknowledging that the path forward may be uneven, noisy, and full of surprises. During those times, please lean on me! I am here to listen, guide, and ensure we stay on the right path to achieve your goals.

– Scott

©The Behavioral Finance Network.

Succeeding in a Future No One Can Predict

Investing is inherently uncertain. Global economies and financial markets are shaped by countless variables—many of them unpredictable and beyond our control. Meanwhile, the media floods us with attention-grabbing headlines, and impulsive investors can sway markets dramatically in short bursts. In such an environment, how should investors respond? How can anyone succeed amid so much noise and uncertainty?

Financial columnist Sam Ro captured the essence of this challenge by breaking the future into three possible scenarios: (1) markets improve and rise in value; (2) markets decline, but eventually recover and move higher; or (3) markets decline and never recover. He then noted an important fact: the third scenario has never occurred. And while anything is possible, betting on an outcome that’s never happened may not be a sound investment strategy.[1]

Planning for Most Likely Outcomes

If Scenario 1 plays out and markets continue climbing from here, the best course of action is clear: remain invested. That one’s easy.

But what if we get Scenario 2? This is when many investors get spooked, selling in an attempt to protect themselves from further losses, waiting for “better times” before getting back in. But is that wise? Only if you can accurately time the market, which no one can. If markets decline but are expected to recover and move higher (we just don’t know when), then isn’t the most responsible approach to stay the course?

The Responsible Choice

History shows that the stock market alternates between Scenario 1 and Scenario 2. Sometimes it rises steadily; other times it declines before eventually recovering. But regardless of which scenario unfolds next, the most effective investment decision has always been the same: stay the course.

We don’t need to predict the next recession, interest rate move, policy shift, or trade dispute. What we can control is our discipline. And that discipline, sticking to a well-designed strategy through all market conditions, can be surprisingly comforting. If the most likely long-term outcome is that markets will ultimately move higher, then patience, discipline, and ignoring the short-term noise become our most valuable tools.

– Scott

 

©The Behavioral Finance Network.

[1] Sam Ro, TKER Substack, May 18, 2025

Don’t Worry, Be Happy

There’s no shortage of things to worry about today—tariffs, economic uncertainty, global unrest—and all of it can impact our financial future. The media often magnifies these concerns, focusing on fear because it grabs attention. Over time, this constant exposure can affect our mood, cloud our thinking, lead to unproductive decisions, and—most importantly—erode our personal happiness.

Choosing Happiness

While life’s circumstances influence our moods, lasting happiness has more to do with the focus of our lives than the circumstances of our lives. We may not control everything happening around us, but we have full control over what we choose to dwell on.

Cynicism and pessimism are easy—they’re almost automatic. But choosing optimism and happiness? That takes effort—and yields far greater rewards. Optimism doesn’t deny reality; it reframes it. When we intentionally focus on what’s going right, we boost both our mindset and our mood. After all, what good is reaching your financial goals if you don’t enjoy the journey?

Just Laugh

One of the simplest ways to lift your mood is to laugh more. Young children are often the greatest examples of happiness. They are quick to forgive, and they laugh—a lot. Studies show the average four-year-old laughs 300 times a day. The average forty-year-old? Just four.[1]

That’s unfortunate, because laughter triggers the release of dopamine, oxytocin, and endorphins—chemicals that elevate mood, reduce stress, and strengthen human connection. Good-natured humor is a powerful tool for well-being.

You don’t need to be funny to benefit. Surround yourself with people who make you smile. Even small acts—like offering a compliment or sharing a laugh—can create positive, unifying feelings.

In a world filled with worry, choosing to laugh, smile, and engage with optimism is a powerful act. We can’t control markets or headlines, but we can control our mindset. Shifting from worry to joy brings clarity, emotional balance, and peace of mind. And that’s not just good for your well-being—it’s good for your financial future.

– Scott

 

©The Behavioral Finance Network. Used with permission.

    [1] Aaker, Jennifer & Bagdonas, Naomil. Humor, Seriously. Page 25. Random House, 2021


 

The Downside of Certainty in Investing

Investors are always seeking for more certainty; we all want to know what the future will hold and make the best decisions today for a better tomorrow. This desire stems deep in our physiology. The brain may consist of a lot of gray matter, but it hates gray areas. It wants certainty and rewards us with great peace when we find it.

The challenge is that much of the future, especially in investing, is uncertain by nature. So, when we feel more certain about something in the future with the economy or stock markets, it is nothing more than a feeling or perception of the future, which can be wrong.

Feeling More Certain or Uncertain

Recently the Wall Street Journal highlighted a few investors who “threw in the towel” in March, going to cash. The common reason behind this was that the investors said the future was more uncertain, so they are going to wait for a more certain time to reinvest. But is the future more uncertain now than at any other time, or is it just our perception or feeling about certainty?

Investors felt quite certain in December of 1999 about the potential for technology. Not only were they fully invested, but they were leveraged. That great certainty about the future lasted only a few months and then came one of the biggest crashes of our generation.

In January of 2020, investors and experts alike were very certain about the economy and markets for the year. But then COVID shut down the global economies. We felt certain, but the uncertain happened.

The Benefits of Uncertainty

When we are certain about a future outcome, we may take on more risk than we are prepared for – simply because we don’t see it any other way. Conversely, when we are uncertain, we tend to be more cautious. We tend to plan more thoughtfully and extensively for our future. We employ diversified strategies because we don’t know what will do well.

While uncertainty can be a very uncomfortable feeling, we can embrace it as investors because it actually helps us make more prudent and discerning financial decisions. After all, the future is uncertain – whether we like it or not.

– Scott

 

©The Behavioral Finance Network.

Is Warren Buffett Bearish?

Last month, Berkshire Hathaway held its annual shareholder meeting which included Buffett’s famous letter to shareholders. In his letter, Buffett is quite transparent with his thoughts about Berkshire’s operations and how he views the economy and markets.  Investors are especially interested in his view on the economy and markets. But what he says and what others perceive isn’t always the same.

The Media’s Take

I have been talking for years about how detrimental the financial media is for investors. They do not have your best interest at heart, only their own profits. Instead of reporting actual facts, they spin information to get the greatest clicks – and this usually is done with a negative bias since negativity sells. True to form, they misrepresented Buffett’s outlook. A sampling of headlines:

  • Why Is Warren Buffett Hoarding So Much Cash?[1]
  • Is Berkshire Hathaway hoarding cash out of fear — or waiting for an opportunity?[2]
  • Warren Buffett Is Out of Step With Markets. Berkshire Hathaway Keeps Selling Stock[3]

What Buffett Actually Said

Part of being an astute investor is going beyond the headlines and learning the facts – all the facts before forming an opinion and making a decision. In this case, after reading the Berkshire Hathaway Shareholder letter, you would have learned Buffett’s real views about how he manages money for Berkshire shareholders[4]:

  • “Rest assured that we will forever deploy a substantial majority of your money in equities.”
  • “The great majority of your money remains in equities.”
  • “Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses.”

 
Compare the three headlines with the three quotations from Warren Buffett and you get a completely different feel for his outlook. If you ever have questions about headlines or other news, please reach out to me so you can get the complete, unbiased story.

– Scott

 

©The Behavioral Finance Network

[1] https://www.wsj.com/finance/stocks/warren-buffett-berkshire-hathaway-cash-annual-letter-2c956952
[2] https://fortune.com/2025/02/21/warren-buffett-annual-letter-berkshire-hathaway-hoarding-cash/
[3] https://www.barrons.com/articles/warren-buffett-berkshire-hathaway-stocks-sales-portfolio-holdings-92567500
[4] https://www.berkshirehathaway.com/letters/2024ltr.pdf?utm_source=substack&utm_medium=email

Why We Diversify

The simplest and truest reason as to why we diversify is that we don’t know what assets will do very well in the future, and which assets will do poorly. Diversification is the evidence that we cannot accurately and consistently forecast the future.

When we invest during a period where one asset vastly outperforms all others, it can be very frustrating to remain diversified. We may be tempted to sell the underperformers and invest more heavily in that which is outperforming. Despite these inclinations, there is strong evidence to suggest that diversification is the best strategy.

Evidence #1

Over the past 10 years (2015 – 2024), technology stocks performed best – by a significant margin. Energy was the worst performer. But did you know that from 2000-2014, energy was the best performer? Any guess to what was the worst performer? Yep, it was technology.[1] So, what asset class will perform best and worst over the next 10-15 years? No one knows. That’s why we diversify.

Evidence #2

JP Morgan recently published an in-depth analysis of the Russell 3000 index (comprises 98% of US stocks) over the past 35 years. Since 1980, they found that 40% of the stocks in the index were extreme losers – suffering a catastrophic loss of 70% or more from their highs and never recovered. And as far as the extreme winners…the ones we all wish we owned from the beginning? Extreme winners were only 7% of the stocks.[2]

How do you make sure you own those extreme winners? It’s very difficult, if not impossible, to do without being diversified. We diversify to help us own the extreme winners that drive a lot of the stock market gains.

Final Thoughts

Diversification works very well over market cycles, but when we evaluate performance in the short term, we may become disappointed and discouraged. That is why investing is a journey. I am here to help you take the long view and make the best decisions in line with your long-term goals and aspirations.

– Scott

 

©The Behavioral Finance Network. Used with permission.


[1] A Wealth of Common Sense, The 2024 Sector Quilt, Jan 15, 2025.
[2] JPMorgan, The Agony & Ecstasy: The Pros and Cons of Concentrated Positions.

A Dependable Forecast for 2025

Most investors love economic and market forecasts. With the markets so uncertain and volatile, our brain craves some sort of idea of what the future holds. But economies and markets are unpredictable – evidenced by the fact that no one can consistently predict them with accuracy.

For example, in October of 2022, Bloomberg gave a 100% chance of a recession within twelve months. Not only did a recession not occur, but markets went up significantly. Anyone heeding such a forecast made a very costly mistake. There are many more similar examples of financial forecasts getting it completely wrong.

Unlike market and economic forecasts, my forecast is dependable and robust because it is based on enduring investment truths and investor behavior. These factors are more reliable than market outcomes and more important to an investor’s well-being.

My 2025 Forecast

In full disclosure, the following forecast is nearly identical to previous forecasts:

• The economy/market will do something that surprises us (and the experts)
• The financial media will enrich themselves by emotionalizing headlines and short-term market moves to entice you to click and tune in. It’s nothing more than click bait
• Investors who tune into the news and evaluate their performance often will experience more stress and anxiety than those that don’t
• Investing in the stock market will be unpleasant at times. Historically, the stock market goes down roughly half the time on a daily basis
• Investors that move to cash, waiting for a “better time,” will suffer significant uncertainty and anxiety about when and how to get back in
• Your investment decisions and reactions to market events will ¬¬have a significant impact on your personal investment return
• You will be tempted to change your investment strategy based on market performance, expert forecasts, and/or your personal beliefs about the future

Conviction, patience, and discipline are virtues every investor should develop. They aren’t easy, yet they are essential for your success. As your advisor, one of my most important roles is helping you ignore the noise and focus on what really matters to your financial success.

I wish you a prosperous, fulfilling, and happy 2025. Thank you for allowing me to be your trusted partner along the journey.

– Scott

 

©The Behavioral Finance Network.

 

Tips to Scam Proof Yourself in 2025

The frequency and efficacy of scammers has increased over the years. A report from the FBI says that losses to cybercrime activities is up nearly 200% since 2020.[1] And with the improvements in artificial intelligence, we can expect scamming will only get more devious and lucrative in the years to come.

Education, intelligence, and success in life do not protect someone from being a victim. The best defense is a good offense. And a good offense begins with humility – understanding that anyone at any time can become a victim to a scam, including you and me. The next step is to be familiar with the different types of scams, and their methods, and create defenses to avoid becoming a victim.

Scams Today

There are many ways people are scammed these days. A few include romance scams, tech support scams, password compromise/reset scam, and scam awareness scams (when the scammer claims to be from a reputable company, says you are being scammed, and offers to help you). I cannot list every way in which we can get scammed, but there are a few dependable defenses that will greatly reduce the likelihood that you and I become victims of a scam.

The scam artists today might have a lot of information about you. They may know who you associate with and companies you do business with. Through hacking and spoofing, they can contact you while appearing to be a known contact or business. They often trigger feelings of fear, greed, love, and/or loss to get you motivated. And they may work under the shroud of urgency and secrecy.

Tips to Protect Yourself from Scam Artists

  • Never click a link in an email or text, even if it is from someone you know or a company you do business with. If you think it might be legitimate, go to the company’s website by typing the URL into a web browser.
  • Never give remote access to your phone or computer. Whether it claims to be IT support or a bank trying to “help” you, giving remote access to your accounts is like giving a thief a key to your home. Double and triple check before giving remote access.
  • Look at the email address of the sender, not just their name. Many deceptive emails will come from companies you do business with. By looking at the actual email address of the sender, you can decipher if this could be legit or is a scam.
  • Share with a trusted individual. Have someone you trust – a family member, close friend, or myself, to talk to if anything happens out of the ordinary. Scams are often more detectable by 3rd parties (because emotion is not in play for that person). This is essential if you are told not to tell anyone or are coached on what to say – those are huge red flags!

In financial planning, we often talk about accumulating assets and then using those assets wisely when you retire. We focus our attention on making wise investment decisions and growing your portfolio. But all of that is moot if you become a victim of a scam. Therefore, protecting yourself from becoming a victim to a scam is a new, and essential, part of the financial planning process. And I am here to help you.

– Scott

 

©2024 The Behavioral Finance Network.

 
[1] Internet Crime Report 2023, FBI Internet Crime Compliant Center. Apr 4, 2024.

The Goodness of Gratitude

Tis the season of gratitude! Thanksgiving is perhaps one of the most underappreciated holidays, but most needed. Given the contentious and divisive election season we have endured, and the possibility that the winner is not what you wanted, it may be difficult to be thankful. But it’s worth the effort because gratitude results in greater and more enduring contentment.1

Contentment is Not Circumstantial

There is no doubt that when things go our way, when we get our desired outcome, it is easy to feel grateful and be content. That’s like riding a bike downhill – it doesn’t take much when things are easy.

But when life doesn’t go our way, we can still be content. And that’s because our contentment has more to do with the focus of our lives than the circumstances of our lives. Granted, this may not be easy. When going through a personal trial it can be like riding a bike uphill – it can take a lot of effort!

The good news is that each one of us is in control of what we focus on, and what we choose to let go.

Reflecting and Expressing Gratitude

While the media reminds us of everything that is wrong in society, we can choose to take time each day (or week) to reflect on the good things in life. That will increase our personal contentment, despite the challenges of life.

And when we include others – when we recognize how others have helped us, and express that gratitude to them, it is a double whammy. Not only is our contentment increased from expressing gratitude, but we help another feel valued, which increases their contentment.

Thank You

I am grateful for you. Thank you for your trust and confidence in me. Thank you for the privilege to know and work with you. Thank you for taking my advice, even when it goes against what may feel right. Thank you for being a patient investor, I know it’s not always easy. And thank you for choosing me as your partner on this journey.

– Scott

 

©2024 The Behavioral Finance Network. Used with permission.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss.

1. https://time.com/5026174/health-benefits-of-gratitude/

The Best Financial Resource for Advisors

Investors have many different financial news outlets across various media channels to select from to get their desired news. Most investors want to be informed – and information is usually good, but it depends on what it is informing you of. How do you discern between financial resources that are beneficial for you and those that are best to avoid?

The Bias of News

As I mentioned in last month’s article, the media only survives if they can get eyeballs and clicks. They must attract attention in a very loud and busy world, and then must keep that attention. The best way to do that is to ensure their news is produced in a way that provokes hot emotions such as anger, fear, sensationalism, and hyperbole.

Is a new agency bent on provoking and attending to hot emotions beneficial for you? Those don’t sound like emotions conducive to thoughtful decision-making. Nor are they emotions that identify with a happy and high quality of life.

The Media Often Misleads

News seldom pertains to just facts, especially financial news. Facts are interspersed among personal viewpoints, spurious forecasts, and whatever else they have to say to get you to tune in.

On Sept 5, 2024, Barron’s ran the following headline:

Stock Markets Must Heed Recession Alarm Bells, It’s Not Just a September Scare

This ran on a day the markets hit all-time highs. And those highs continued throughout September. Not only do they sensationalize things; they are often quite wrong. And that’s because their job isn’t to get anything right. It is just to get you to click.

I Am Your Best Financial Resource

The media may be 24/7 and promote many tantalizing headlines, but I am your best and most reliable financial resource. Not only do I understand your unique situation, your goals, your plan – I also have your best interest at heart.

Please reach out with questions about what you read or hear. If the news has you concerned – contact me. I am your best financial resource no matter what is going on. That is an honor and a privilege for which I am very grateful for.

– Scott

 

©2024 The Behavioral Finance Network. Used with permission.