Sometimes our clients come on board with a few bad habits learned from prior investment experiences. They may be focusing on events outside of their control, or they may have confused strategy and outcome (meaning they don’t recognize that their good returns were mere luck). In a recent video from AQR, founding principal John Liew draws a clear difference between good and bad investors. We love his definitions for each, and we’ll continue our work converting more people to good investors. Click here for the video.

The first few weeks of 2016 were the worst start for the S&P 500 in history. So what should you do? The attached article serves as a reminder that negative returns in January (or any single month) are not meaningful because the subsequent 11-month returns have been positive 59% of the time, with an average return of 7%.

Accept the periods of negative volatility and remain disciplined. As the time period increases, the probability of realizing positive expected returns increases. Let patience lead to prosperity.

We can’t help but point out this recent (and expensive) full page advertisement from Fidelity about their belief in active management. Though you won’t hear us say that active managers can’t possibly win in the short-term, we certainly know that it’s hard to identify the winners in advance.

The 15-year data on the odds of active management (as shown in this graph) indicates that we’re far better off adopting a low-cost, evidence-based approach and sticking to it over long periods of time. Doesn’t that sound prudent?