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15 Years Later: Learning from the Global Financial Crisis

15 years ago the markets began to recover from the most severe economic crisis since the Great Depression. The Global Financial Crisis resulted in many jobs lost, stock markets losing half their value, and the personal and psychological toll was significant.

The GFC was the greatest test of investor fortitude this generation has experienced. Many well-intentioned investors sold stocks as the market went down. Every experience, whether positive or negative, is an opportunity to learn from the past and make better decisions for our future.

How Much Gain Did You Experience?

Since the market hit bottom in March 2009, the S&P 500 Index is up over 800% or 15.9% per year.1 How much of that gain did you experience? The only way investors didn’t participate in all the gains of the recovery was because they sold when markets went down. In fact, that’s what the average investor did. But we want to be better than average.

Selling during scary and uncertain times usually is referred to as “getting to safety.” While getting to safety provides an immediate psychological benefit, it often results in a very real financial cost. Next time you feel the need to “get to safety” perhaps it can be re-framed as “reducing my future return.” Because no one sells and gets back in at the bottom. The only way to participate in all the gains of the market is to ride out all the temporary losses that come along the way.

Sage Advice for the Future

Howard Marks, a well-respected investor and hedge fund manager, gave great advice to help investors capture market gains. He said,

“Our performance doesn’t come from what we buy or sell. It comes from what we hold. So the main activity is holding, not buying and selling.”

When markets are scary, uncertain, and the outlook is dire, the natural reaction is to sell. But the best response and main activity for long-term investors is to hold. That won’t be easy, but that is why you have me! Our focus, energy, and efforts are in holding through the inevitable and occasional difficult economic periods so we can participate in the wealth-creating power of the stock markets.

– Scott

©2024 The Behavioral Finance Network. Used with permission.

1. S&P 500 Index from 03/2009-02/2024. Performance includes reinvestment of dividends. 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. All indices are unmanaged and may not be invested into directly.

What Investors Can Learn from Athletes

Nick Saban, recently retired football coach of the Alabama Crimson Tide said, “If you want to be good you don’t really have a lot of choices.” He was referring to the choice to either be disciplined (or not) to a specific process that would lead to success.

No one is born an athlete. We are all human with similar preferences: sleep/rest over working out, eating the donut rather than broccoli, and having fun instead of working.

Athletes are created through dedication to a routine or process that will help them become an athlete. They show up at the gym, they follow a nutrition plan, and they endure in their routines even when they don’t feel like it or want to. Persistent discipline to that routine is what makes them an athlete.

A Solid Investment Process

The “secret” to becoming a great investor is no different. It requires discipline to a process or routine. Not just any routine, but the right one. Watching the stock market is a routine, but it doesn’t develop a successful investor. So, what routines or process can investors take that will help them become great?

  1. Ignore Economic and Market Predictions. Our desire for future certainty puts us at risk to fall for the illusion of certainty – which is the only certainty the experts offer.
  2. Focus on Fundamentals, not Price Movement. Daily stock price movements seldom represent the true value of the company at any given time. Earnings and cash flow deserve your attention, not the price movement of the stock.
  3. Have a Reaction Plan. A reaction plan is a process itself of what you will do when the inevitable surprising events occur. Will you respond immediately? Will you take your cues from the media? Will you talk it over with me? I suggest the latter.

The Process and You

Defining your investment process is important and practiced by many investors. But the maintaining discipline to that process is what separates the average investor from the most successful investors. Discipline is what makes athletes, athletes. And it is what can help you achieve your financial goals. I am here to help you along the way.

– Scott


©2024 The Behavioral Finance Network. Used with permission.

Succeeding at Self-Control

Self-control is an important characteristic to develop that can help us in all aspects of our lives from biting our tongue, to passing on the sweet treat, to accomplishing our New Year’s resolutions. But it isn’t easy! In fact, it can be downright painful, especially when trying to control some urge.

It’s Not About Willpower

Many people say what they need is more willpower and discipline, but that isn’t it. And thank goodness because we have a limited amount willpower that depletes quickly.

James Clear, author of Atomic Habits, said, “The people with the best self-control are typically the ones who need to use it the least…the way to improve these qualities is not by wishing you were a more disciplined person, but by creating a more disciplined environment.”1 (emphasis mine)

It’s About the Environment

When we engage in an activity that requires self-control, we should seek to create an environment that will lessen the need to use self-control. If we are seeking a healthier lifestyle it would be easier for us to accomplish if we spent more time (and money) in the produce section and less in the bakery section of the grocery store.

We cannot control all environments we find ourselves in, but we can adjust many of them to create an easier environment to behave the way we wish to behave. Becoming, improving, and accomplishing is often just a product of our small daily decisions.

Your Investment Environment

The investment environment is one that investors can control pretty easily. Most investors prefer peace to anxiety, stability to volatility. The markets, which are uncertain and volatile by nature, will not provide that. But choosing not to tune in, not to look at every move and sensational news headline, produces an environment much more conducive to feel peace and stability.

No matter what you are seeking to accomplish, changing your environment can be much easier than exercising willpower to act in the way you hope and wish to act. And when it comes to investing and financial matters, I am here to help you reach your goals, and help you feel confidence and peace along the financial journey.

– Scott


1. Clear, James. Atomic Habits. 2018

©2024 The Behavioral Finance Network. Used with permission.

A Robust Forecast for 2024

The brain may be filled with gray matter, but it hates gray areas. And there are few other places we find gray areas (uncertainty) than in the economies and markets of the world. One word of caution: our innate desire for certainty leaves us prone to fall for the illusion of certainty. Market and economic forecasts often provide an illusion of certainty.

As much as we wish it weren’t the case, the markets are unpredictable – evidenced by the fact that no one can consistently predict them with accuracy. Of course, a certain forecast will be right from time to time, just like a broke­n clock. But market and economic forecasts are not reliable prognosticators, no matter how much we wish they were.

Unlike market and economic forecasts, my forecast is reliable and robust because it is based on enduring investment truths and investor behavior.

My Forecast For 2024

In full disclosure, the following forecast is nearly identical to my forecast from last year and years prior to that.

  • 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 watch the news and stock market often will experience more stress than those that don’t
  • 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 2024. Thank you for allowing me to be your trusted partner along the 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.

Achieving Success

As the year comes to an end, it’s a good time to reflect upon the year behind us. The good things, the bad things, and the success we achieved along the way.

Sometimes we rely upon favorable circumstances to achieve success, but circumstances are often beyond our control. While our circumstances can make it easier or more difficult to achieve success, they do not create success on their own. Researchers have found that mental toughness and perseverance predict our level of success more than any other factor.

Making Your Own Success

Jeff Olson, author of The Slight Edge, found that our personal success in life comes down to a simple formula. We generally know what activities will produce success in a given realm. Then we just apply the formula – Create simple daily disciplines and do them without fail. Notice the word “simple?” These should be small things you can do daily.

Success isn’t a secret formula. Often the greatest difference between achieving average results and being successful comes down to consistently doing the simple daily disciplines, the daily habits. These habits may not appear to be working in the short-term, but they will compound over time. Having perseverance and mental toughness is crucial to achieving success.

Success in Investing

The media often refers to “smart money.” I don’t know why because they are known to make some pretty costly decisions. And intelligence has very little to do with investment success. Warren Buffett said that once you have an average IQ, what sets apart successful investors is their ability to control the urges that influence us to make unwise financial decisions.

These urges are natural, and they are hard to fight off. It takes mental toughness to ignore the feelings and headlines. It takes perseverance to remain disciplined and patient when the market is irrational.

But that is why you have me! I understand the urges, how we can alleviate them, and remain focused. I am here to help and guide you along your financial journey. Just like with a personal trainer, sometimes it is easier to exhibit mental toughness and persevere when you have someone cheering you on. Onward and upward!

– Scott

©2023 The Behavioral Finance Network. Used with permission.

Increase Your Happiness by Expressing Gratitude

Tis the season of gratitude. Thanksgiving is perhaps one of the most underappreciated holidays, but most needed. Studies have shown that gratitude promotes many positive benefits – increased and lasting happiness being one of them.1

Happiness is a desirable state of being shared by all people – irrespective of culture, background, or religion. Unfortunately, the pursuit of happiness is often focused on circumstantial happiness rather than enduring happiness.

It is true that some circumstances result in happiness, but such happiness is often temporary in nature, and will change as the situation changes. Enduring happiness is what we really seek. It requires more effort, but it is not subject to the whims of our ever-changing circumstances. We can increase happiness in our lives, no matter where we are or what we are going through, by practicing and expressing gratitude.

Why is Gratitude so Difficult?

Practicing daily gratitude can be difficult. This is because we are never at our “ideal.” There is always something better that we are pursuing. Seeking improvement and progress is a wonderful endeavor, but we shouldn’t become so obsessed with “ideals” that we fail to reflect on past progress and those things we have been blessed with.

What do you do first thing in the morning? Many people check their phones to see news headlines of the day and work emails – things that are often negative and/or stressful. How do you end the day? When we engage in activities that are stressful and/or concerning, it can be more difficult to express gratitude.

Making Gratitude Easier

Engaging in morning and evening activities that are positive in nature can make it easier to express gratitude. Exercising, playing with an animal, engaging in what interests our kids, or writing in a gratitude journal can make it easier to feel and express gratitude.

What one thing are you grateful for today? A great question to reflect on every day. Such reflection encourages positive thoughts, feelings of gratitude, and ultimately greater happiness. Positive activities may take more effort, but it’s worth it!

Thank You

We are grateful for you. Thank you for your trust and confidence in us. Thank you for taking our advice, even when it goes against what may feel right. Thank you for being a patient investor – we know it’s not easy. And thank you for choosing us as your partner on this journey.

– Scott

©2023 The Behavioral Finance Network. Used with permission.

Magnifying the Present

It is human nature to focus more on the present than the future, which is in line with our basic instinct of survival.

We focus on the present because that is where “life happens” and we experience feelings such as pleasure, pain, anxiety, and peace. Every day we face cost-benefit tradeoffs that not only impact our lives today, but potentially for years to come. Because of our nature, we often select those things that bring immediate gratification while delaying its cost into the future.

Investing Tradeoffs

Perhaps the most frequent and material tradeoff investors face is whether to sell when markets go down and the outlook is negative (they receive immediate emotional relief) or remain disciplined to the strategy even as account values go down. The former is easy, the latter requires conviction and perseverance. The tradeoff comes down to emotional comfort today vs. potential for greater long-term returns.

“The real key to making money in stocks is not to get scared out of them.”
– Peter Lynch

Smart Today May Not Be Smart Tomorrow

We tend to extrapolate the present into the future, as if things will never change. When times are good, we feel good and may underestimate the risk. When things are bad, it’s about how much worse things are going to get – especially when you have exaggerated headlines that feeds into the doom and gloom.

But things change – they always do. We don’t know when or what may cause the change, but markets and economies are cyclical. What may seem smart today could end up being unwise and costly down the road. That is why your plan is so important. It is the anchor that helps us bridge the present to the future and helps us make sure the decisions we make today will be in your best interest tomorrow.

– Scott

©2023 The Behavioral Finance Network. Used with permission.

Timing the Market

Why is it that many investors feel the urge to time the stock market? Since 1950, stocks have been in a bull market 83% of the time – despite all the crises and corrections.1 You would think investors would be happy with that kind of result. But that isn’t the case. Investors spend a lot of time and energy attempting to avoid losses, which ironically, leads to lower long-term performance.

The Cost of Timing the Market

Morningstar recently released their annual Mind the Gap report, which compares investor performance with the underlying investments. They found that, over the last 10 years, investors underperformed the very funds they were invested in by an average of 1.7% per year.2 This finding is not unique as it confirms what Vanguard also found.3

This underperformance is largely attributed to the timing of purchases and sales of securities. Investors are influenced to buy after things go up (chasing what is hot) and sell after experiencing losses as investors attempt to “get to safety.” But with a market that is historically positive most of the time, why do we feel the urge to try to time it?

Thank Your Brain

Our desire to avoid all losses, even losses that may be temporary, is driven by the way we are hardwired. Our brains are sensitive to financial loss because they are viewed as a threat. They threaten our comfort and potentially our livelihood. And what does the brain do with a threat? It seeks to avoid and eliminate it. Therefore, the urge to time the market is completely normal and natural. But that doesn’t mean it is beneficial.

Investors may wish to exert greater control over these urges so they can make better investment decisions. I think that is a wonderful endeavor, but it is difficult! You need almost superhuman willpower to overcome these innate urges.I have identified two ways that make it easier to control the urges to time the market:

1. Don’t watch the markets. If you don’t look, the urges lose their power.
2. Talk with me – that is what I am here for. Timely perspectives can help investors remain grounded and ensure decisions are in line with their plan.

– Scott

©2023 The Behavioral Finance Network. Used with permission.

1. Callie Cox, eToro, tweeted data on June 12, 2023 found at
2. Morningstar, Mind the Gap, July 31, 2023
3. Vanguard, Advisor’s Alpha, July 2022

The Virtue of Slowing Down

Time is an interesting dimension. It is a fixed measurement, yet our perception of time varies greatly depending on what we are doing.

It has been said that the longest eight seconds in life is riding a bull. I never rode a bull and have no interest in testing that statement for myself. So, I will take it as fact. But even so, eight seconds is eight seconds – regardless of what we are doing.

It’s About Perception

Time seems to “fly” when we are engaged in a fun, exciting, or stimulating activity. And it appears to stand still when we are scared, anxious, or bored. In other words, the things we enjoy in life make it “go” quickly, while the things we dislike seem like they last for an eternity.

This means that when we are engaged in desirable activities, such as summer vacation with the family, it may be worthwhile to take a moment to slow down and reflect on the experience. This will allow us to relish the moments and the subsequent memories – which we can call upon during the more difficult times.

Slowing Down & Investing

Slowing down can also help us make better financial decisions. Financial information comes at us quickly, and because it has to do with gains and losses, can cause us to become emotional. Responding immediately is a natural impulse and can feel great when we are emotional, but it is seldom beneficial…especially when it has to do with money.

Slowing down empowers us to take a more mindful approach to the decision at hand. We are constantly bombarded by the news du jour, brash opinions, and impulses to respond quickly. How does one slow down? The first step is to commit to make more mindful, less emotional financial decisions. The next step is to contact me – I will help you through the process.

One of the things I love most about being an advisor is helping investors ignore the noise and take a more deliberate and mindful approach to their decision-making. It not only improves decisions, it also improves the investor experience. I am here for you!

– Scott


©2023 The Behavioral Finance Network. Used with permission.


The Advantages of Low Expectations

We all want desirable outcomes – those outcomes that bring us happiness, peace, and prosperity. Because we desire such outcomes, we may go into situations having high expectations. But it may be more beneficial to temper our expectations if we want to experience greater contentment in life.

Disappointment & Contentment

Disappointment occurs when a situation or outcome is worse than we expected. By intentionally setting expectations low, such as expecting long lines at the airport and flight delays, we decrease the likelihood of becoming disappointed or angry when “life happens.”

Contentment, on the other hand, results from situations our outcomes that exceed our expectations. When we lower our expectations, we put ourselves in a position to be pleasantly surprised more often, such as when we breeze through security and our flight arrives a few minutes early.

When we set expectations for something, we should consider how much control we have over the situation. If we have a great deal of control, we may feel confident setting high expectations for ourselves. But when things are out of our control, we should consider keeping our expectations low.

Investment Expectations

Most investors want to achieve high rates of return with little fluctuation in value. Assuming a given (and acceptable) level of risk, the higher the return, the better. But we should be careful to keep our investment hopes and desires separate from our investment expectations.

When we temper our investment expectations, we are in a better position to handle market surprises. Every year the market surprises us. Tempered expectations empower us to enjoy the positive surprises and put us in a healthy mindset to handle and adapt to the negative surprises.

I have found that the best expectations for investors are a combination of realistic optimism for the long term coupled with the expectation that, in the short-term, markets may not make sense and often fluctuate considerably.

– Scott


©2023 The Behavioral Finance Network. Used with permission.