Unruffled serenity. We love that expression. It’s exactly what we seek to bring to our clients – especially when the volume of market noise rises to a roar, as it has in the latter half of 2018. We can’t claim credit for the phrase, though it does pair with our own tagline, Take the Long View®. Both are aimed at detaching emotions from market swings, whether high or low. The long-term view has always sloped up and to the right, but in the short run it’s unpredictable.

Who else can help bring a sense of calm in these times? We point you to Jason Zweig of The Wall Street Journal. Ever since Zweig launched his Intelligent Investor column a decade ago (succeeding the equally adept Jonathan Clements), it’s been far easier to list his few underwhelming columns than the vast majority we’ve enjoyed. His brilliant book, “Your Money & Your Brain” also has a permanent place on our recommended reading list.

As high a bar as Zweig has set for himself, we were particularly pleased by his recent column on market volatility and a behavioral bias known as herd mentality. The article explores a volume of evidence suggesting investors and even portfolio managers are strongly influenced by the “emotional contagion” of their neighbors. This results in market participants in communities, cities and even states mimicking one another’s trading habits, often to their detriment.

“Investors probably behave like their neighbors because gossip, news and beliefs spread by word of mouth,” says Zweig.

His suggested antidote to catching this communicable “disease” strongly reflects our own. Pointing to investment legend and economist Benjamin Graham (Warren Buffett’s mentor), Zweig describes how Graham went out of his way to cultivate “unruffled serenity,” strengthened by “a certain aloofness,” to ward off the constant peer pressure to react to random market noise.

Zweig concludes:

“With markets gyrating, unruffled serenity may become important again. If volatility scares you, spend more time with family and friends who don’t obsess over stocks. You’ll be happier now—and, probably, richer later on.”

We’ve all been there, done that: When the markets grow volatile, they can literally make your stomach churn. As a team member of Hill Investment Group, I know better than to get too hung up on the never-ending breaking news in the popular financial press, but I do still find it helpful to read the perspectives of other thought leaders who are as committed as we are to evidence-based investing.

Here are two such pieces published during the recent jolts of market volatility. I found them helpful; I hope you do too:

“When Investing in Stocks Makes You Feel Like Throwing Up and You Do It Anyway,” by Jason Zweig of The Wall Street Journal

Zweig reflects on how awful it felt to stay invested during the Great Recession, but how glad he is now that he overcame his deepest doubts: “A happy few investors, among them Warren Buffett, his business partner Charles Munger and their mentor Benjamin Graham, may have long-term thinking built into them by nature. The rest of us have to cultivate it by nurture.”

“Some alternatives to Evidence-Based Investing,” by Josh Brown, the Reformed Broker

Satire can be a great healer. Here, Brown lists some of the “better” tactics people use instead of evidence-based investing and concludes: “The harvestable errors of emotionally unaware people in the marketplace are a bumper crop for the patient, the sane and the disciplined.” Tough but true love about the wisdom of evidence-based investing.

At Hill Investment Group, we love to ask questions – to get to know you upon initial meeting and discover more about you as we go. But what questions should investors be asking? Here are “The 19 Questions to Ask Your Financial Advisor” (or a prospective advisor) according to Jason Zweig of The Wall Street Journal. At the highest level, these 19 questions seek to establish the rhetorical question: Are you paying your advisor to serve YOUR best interests or their own?

“The obligation of those who give investment advice to serve clients, not themselves, is called fiduciary duty. That obligation is far from universal and, in some ways, is in retreat,” says Zweig (emphasis ours).

The challenge, however, is merely asking an advisor if they are a fiduciary may not suffice. Zweig’s queries will help you differentiate fake fiduciary “talk” from a real fiduciary “walk.”

Zweig also provides the answers he feels are most appropriate, while leaving #12 (“What is your investment philosophy?”) curiously blank. We agree wholeheartedly with nearly all of his suggested responses, although there are a couple we would qualify. And of course we have quite a lot to say about that curiously blank one. Here, we’ll simply add the words of Dimensional Fund Advisors’ co-founder Rex Sinquefield, as he describes evidence-based investing: “This investment approach is easy to communicate, is verifiable, and is eminently defensible.”

This and many other great insights are found in Dimensional’s recently published “35 Quotations on a Better Way to Invest.” Want a copy of it, or would you like to know where else we differ on Zweig’s other questions (and why)? Just ask!

Oh, by the way, YES, we are a fiduciary firm – in name and practice.