It takes only a glance at Dimensional Fund Advisors’ 2018 market summary to recognize global markets didn’t leave anyone applauding in the end. The volatility put the popular press in a tizzy (with no certainty on what lies ahead). Not surprisingly, our response has been to double down on our perspective on how to maintain “unruffled serenity” in volatile markets.

For example, in our fourth quarter client letter, we revisited an important, annually updated Dimensional chart depicting yearly market premiums since 1928. We’ve shared similar charts before, but it remains worth repeating whenever the going gets tough. As we wrote in our letter, “No one complains when they finish the year with stock returns much higher than average, but the typical investor has a hard time handling a big down year.”

We share an excerpt from our client letter today, hoping we can help you, too, Take the Long View®.

January 2019

Unruffled Serenity and Taking the Long View

Why would an investor want to accept wild, short-term swings in the markets? Because investors are paid for enduring those swings. It’s that simple and that hard.

Because stocks ended 2018 with a series of dramatic gyrations, we decided to illustrate just how normal these big market movements really are. The following chart, which shows the annual performance of the U.S. stock market since 1928, illustrates why it’s worth maintaining a long view and disciplined investment strategy.

The blue bars indicate years in which the broad U.S. market delivered an average return above T-bills (i.e., a positive premium). The dark blue bars indicate years when a positive equity premium was within a 2% range of its long-term average (represented by the dotted black line). On the other side, the red bars indicate years in which the market underperformed T-bills (i.e., a negative premium).

The first thing to notice is that on average, the annual market premium has been strongly positive and there have been more years of overperformance than underperformance. But in any given year, the U.S. market premium has varied widely—sometimes producing extreme positive or negative performance relative to T-bills. It’s worth repeating: The premium has been within 2 percentage points of the long-term annual average in only four years since 1928.

As savvy long view investors, we know that if we want a long-term average annual premium from the equity portion of our portfolios we have to expect and endure returns in any given year that are wildly above or below that average. No one complains when they finish the year with stock returns much higher than average, but the typical investor has a hard time handling a big down year. What separates us is knowing that we win over the long run by embracing this volatility. We win because in the boring math of investing, the long-term owner of global capitalism is likely to end up in the top decile of all investors. It’s simple, but it ain’t easy. Maybe we should call it a serenity premium?

At best, they’re annoying as all get-out. At worst, you end up falling for them. Either way, with phone services gone mobile, scam callers are finding us wherever we go. As stated in this recent AARP Bulletin, “5 Ways to Stop Spam Calls,” American homes are receiving about 4 million robocalls every hour.

That much ringing sure is one big headache. Although I can’t promise to eliminate those pesky calls completely, I can offer several tips for managing them.

Silence Is Golden

You can start by reading the AARP Bulletin I referenced above. One simple tip requires no action at all, just a little habit change. The author suggests answering your phone with several seconds of silence when you first pick up. You may even want to let the other party say “Hello?” first.

While this may seem harsh, the reality is, if it’s a real person trying to reach you, the pause shouldn’t impede the conversation. If it’s a voice-activated robocall, the silence should not only cause them to disconnect and move on, it could trick them into assuming the number is invalid, which might also discourage them from trying to call back.

Pros and Cons of the Cold Shoulder

Should you simply skip answering the phone at all, assuming anyone who matters will leave a message? It’s an easy way to avoid speaking with anyone you shouldn’t. Especially if you find it hard to hang up on an unwelcome call once you’ve answered it, this might still be your best bet. But recognize that, unlike the silent treatment above, reaching your voicemail confirms that your number is indeed in service. This can set you up for repeat attempts and increased robocall volume in the future.

Who’s There?

With most phones offering CallerID, you may be able to identify unwelcome calls on your own. For example, the AARP Bulletin notes, “Beware of area codes 268, 284, 809 and 876, which originate from Caribbean countries.” If the caller’s number is similar to your own, that’s another red flag. For example, say your phone number were 123-456-7890. Any unfamiliar call supposedly from the same 123-456 prefix is likely bogus.

The AARP Bulletin also suggests several free services and apps to help you further identify, flag and block spam calls on your cell phone and landlines alike.

Tough Love About Phone Etiquette

If you do end up answering a spam call despite your best efforts, your top concern should be ensuring you don’t fall into any traps once they get you on the line. The instant you recognize the caller may be illegitimate, go silent. Don’t ask or answer any questions. Don’t even explain why you’d rather not speak with them. Just hang up. Immediately. If the caller was claiming to be from an institution you do business with, such as your bank, you can always call that institution directly to report and ask about the suspicious call. This is similar to the advice I offered on email phishing.

The time has come for us to reframe phone etiquette! The old way called for being immediately pleasant and engaging when a stranger called. The new way? Let the stranger say “hello” first. Although Miss Manners may not approve, answering a stranger’s call with a couple seconds of silence may reduce these calls for good. If you have additional ideas, we are always here to discuss.

Even in the normally staid world of fiduciary investment advice, we have our stars – heroes who inspire us with the brave choices they make to better the lives of investors.

Vanguard founder John C. “Jack” Bogle, who passed away on January 16th at age 89, was among the brightest (and most stubborn) stars of them all. The world lost a giant that day, as evidenced by the instant outpouring of respects paid from around the world.

Bogle refuted the status quo and gave birth to the retail version of index investing in the 1970s. He was energized by the crusade until his dying day.  In the video homage below, The Wall Street Journal columnist Jason Zweig observed, “[Bogle’s career] spanned over six decades of change and growth in the industry that he helped to transform.”

To pick a sample from the deluge of sentiments expressed in the media, we especially appreciated a New York Times piece by Ron Lieber and Tara Siegel Bernard, “The Things John Bogle Taught Us: Humility, Ethics and Simplicity.” Many of our other favorite financial voices of reason are represented here, including Behavior Gap’s Carl Richards, and Manisha Thakor, herself a worthy crusader for women and wealth.

We’d say RIP, but Jack Bogle didn’t want people to rest. He roots for us to fight for what’s right, even when it isn’t popular. He was a relentless agitator for good, and his spirit inspires us to keep pushing for better solutions for investors. Every single day.