Author, legendary professor, researcher, and consultant in behavioral finance, Meir Statman joins Matt Hall in the latest podcast episode to discuss his work and how taking the long view has paid off. We think you’ll love listening to Meir talk. For example, here is one of our favorite exchanges:

Matt Hall (11:34): How would you describe the differences between how people view and communicate about money in Israel versus in the United States?

Meir Statman (11:45): That is actually a very interesting question. One aspect of it has to do with the notion that I describe as giving with a warm hand, rather than with a cold one. Now of course, cultures in the U.S. vary greatly, and I don’t want to overgeneralize. But I think that there are many American parents who have the sense that if they give money to their kids, for example, when they complete college and they want to get married and they want to buy a house, that giving them money is going to spoil them, is going to kill any ambition in them. And that I find not just stupid, but heartless and really counterproductive. What parents can do of course is help people find their ambition, find their vocation, but you are not going to do that by depriving them of resources that they need when they’re in their 20’s and beginning.

There’s more good stuff beyond this clip. Take a listen to one of the O.G’s of the behavioral finance world.

Listen below or click here.

There is no downplaying the news coming from Ukraine and Russia. While Russia makes up a small percentage of the overall global stock market (less than .25% as of February 23), Russia and Ukraine both play considerable roles in producing and supplying commodities such as liquid natural gas, wheat, etc.

What does this mean for you as an investor?

The situation is currently evolving. We know that political leaders from the West condemned Russia’s actions and vowed significant sanctions in response. Markets reacted with increased volatility, and some stocks retreated.

While no two historical events are the same, historical context is often helpful to put current events into context. The chart below illustrates the growth of a dollar invested in global equities alongside past crises. Think back to some of these events- it’s easy to remember how uncertain the future felt. Putting current events into this context helps us take the long view. The chart shows that markets rewarded disciplined investors for their grit. This chart is a good reminder of what it means when you invest for the long term, and the fortitude being demanded of us today.

Takeaways

• It is rarely advisable to mix emotions and investing.
  History shows us that a critical ingredient of long-term investing success is having discipline in good times and in difficult periods. Markets have rewarded investors willing to tune out the noise and stick to their plan. So, we advise you to stick with yours.
• Your systematic investing approach already adjusts to new information in real-time.
  Investors in global equity portfolios inevitably face periods of geopolitical tensions. Sometimes these events lead to restrictions, sanctions, and other types of market disruptions. We cannot predict when these events will occur or exactly what form they will take. However, we can plan for them. We do this for you by managing your diversified portfolios and building flexibility into our investing process.
• Staying invested is the winner’s game.
  In good times and in bad. A recent report by Morningstar investigated how successful investors are when trying to time markets. Ultimately, the report concluded, “The failure of tactical asset allocation funds suggests investors should not only stay away from funds that follow tactical strategies, but they should also avoid making short-term shifts between asset classes in their own portfolios.”  Why? Missing out on a couple of the best-performing days wipes out your returns. And, to time correctly, you must be right twice – both when to get out and when to get back in.*
• Diversification is the only free lunch.
  This quote attributed to Harry Markowitz as essential now as ever. We believe that the most effective way to mitigate the risk of unexpected events is through broad, global diversification and a flexible investment process. This philosophy allows you to ride the wave through any crisis, such as natural disasters, social unrest, and pandemics, limiting risky overexposure to any particular sector or market.
• Take the long view.
  We don’t believe that this time it’s different, but instead the apocalypse du jour. You can be confident in your approach, your plan, and your team. We are here for you.

Sorry to burst your bubble.

There is no spreadsheet that can guarantee you will be fine. There is no amount of money that can guarantee you’ll always have enough. Uncertainty equals reality.

But that doesn’t mean we should live our lives petrified with fear.

Once we accept that the Magic Certainty Button doesn’t exist, we can stop looking or hoping for it. We can take all that wasted time and energy, and use it to do something more helpful—like repeating Reinhold Niebuhr’s Serenity Prayer over and over again.

God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.

Not into prayers or mantras? Try this:

1. Make a list of all the things that matter that you can control.

2. Look at that list and put a big, fat checkmark next to everything you’ve addressed to the best of your ability.

3. Whatever you didn’t check off, take some time to work on it.

4. Any time you start craving that Magic Certainty Button, just go back to that list, and remind yourself that you have done everything you can (or if you haven’t, then do whatever you can).

5. Let go of the rest.

If you can do that—specifically, if you can make it all the way to step 5—you’ve got a touchstone for what can help you feel just a little more comfortable in an uncertain world.