1/ I believe that the highest probability bet you can make in your investment strategy is that human nature will remain a constant for the foreseeable future. For my book “Predicting the Markets of Tomorrow”, I analyzed nearly 200 years of data
2/and found that the rolling 20-year real rate of return to financial markets ebbs and flows with a remarkable degree of consistency. I believe this is so primarily because human beings are responsible for the economic and stock market cycles.
3/While the types of companies and industries that get us excited has and will continue to change over time, our reactions to them will remain the same—we’ll get unusually excited about the new and over-price it and be blasé about the old and under-price it.
4/Be it steamboats, railroads, telegraph and telephones, automobiles, motion pictures, radio, TV, aluminum, “space-age” technology, the first computer makers, internet stocks, nanotechnology or quantum computers, our human reactions to innovation are sure to persist.
5/Just as in the past, we will more than likely drive their valuations to unsustainable levels. Our basic human nature is probably more responsible for the long-term ebbs and flows in the market than any single economic event or innovation.
6/And since they are unlikely to change, we can confidently presume that we will make the same mistakes and errors again, again and again. We will panic in bear markets and often sell near the bottom.
7/We will become elated during bull markets and become more and more confident near the top. We pay the highest price for a widely agreed upon consensus. Yet I’ve also learned that it’s virtually impossible to forecast the ups and downs of markets.
8/The good news is, if you are investing for the long-term, you don’t have to—I’m 58 years old, but my time horizon is infinite because I want to leave money to the people I love and the charities I care about.
9/Often in investing, the best thing to do is nothing. It’s boring. It’s incredibly dull. You won’t have any great stories about your market savvy at dinner parties. But if you can simply remain dispassionate about all the emotionally charged things happening
10/around you day-to-day, you will come out ahead of virtually everyone else in the long-term. Want proof? I wrote most of this in 2006, and it is as relevant today as it was then. And will probably be equally relevant in 2026.
11/Much of life is filled with uncertainty which causes stress and worry. Remind yourself that most of these stomach-churning events are things that you have NO control over. Focus only on what you DO have control over.
12/10% of the impact of events are due to the event itself and 90% is due to how we react to it. That’s something that, if you work on it, you CAN control. Successful investing is simple to think about, but incredibly hard to actually do.
13/Finally, remember that the best investment you can make is in yourself. If you can turn these simple actions into habits, your future returns will allow you to, as @alphaarchitect puts it, compound your face off. Get after it.
