Human Nature Is a Failed Investor—But Your Plan Doesn’t Have to Be

When I entered this business in the late 1970s, I quickly realized that markets weren’t the real challenge — people were. Not because they lacked intelligence or information, but because the human mind is wired for survival, not investing. We’re built to react quickly to threats, follow the herd, and assume whatever is loudest must be most important. In nature, that instinct keeps us alive, but in markets, it quietly destroys wealth.

The clearest pattern I saw then (and still see) was how reliably investors rush toward whatever just went up and run from whatever just went down. If an investment has recently risen, it suddenly feels safe. If it’s fallen, even briefly, confidence evaporates. I’ve watched otherwise sensible people abandon great companies at once-in-a-generation prices simply because fear grew louder than fundamentals.

After five decades, nothing has changed. Today the crowd chases the “Magnificent 7,” Nvidia or whichever stock is currently lighting up the charts. The moment turbulence appears, even tiny turbulence, people rush for the exits — not because the businesses changed, but because the noise changed. Human nature responds to noise.

Eventually I learned a simple truth that shaped my career: This is not a market problem; it’s a human problem. And human nature, left unattended, is a failed investor.

Nick Murray says it candidly: “Your lifetime financial outcome will be determined far less by the investments you own than by the behavior you exhibit.” After nearly 50 years, I cannot think of a clearer summary.

This leads to something tragic and something hopeful. Tragic: Human nature will lead you astray at precisely the wrong moments. Hopeful: A plan can lead you back.

People often ask, “But Steve, what about the economy? Elections? Interest rates? Wars? Don’t those move the market?”

After all my years in this field, the uncomfortable truth is they don’t. At least not in any consistent, predictable or usable way. The economy can be strong, and the market can fall. The economy can weaken, and the market can rise. Headlines look backward; markets look forward. They rarely speak the same language.

Trying to navigate long-term investing with short-term news is like steering a ship by watching the wake behind you. This pulls investors into the same two mistakes: buying high because it feels safe, and selling low because it feels scary. Which is to say, behaving exactly opposite of how successful investing works.

Here’s where Murray’s wisdom becomes unavoidable: “The dominant determinant of long-term real-life returns is investor behavior.” Not timing. Not forecasting. Not cleverness. Behavior.

And that brings us to something I call “the package,” the real contract of equity investing. It’s simple: You cannot receive the market’s long-term premium returns unless you’re also willing to accept its temporary declines — two realities that have and always will coexist. You don’t get spring without winter. You don’t get growth without volatility.

This contract is binding whether you acknowledge it or not. Every investor signs it the moment they commit to long-term growth, but most don’t realize this until the market declines, and they want out. The fine print remains: Temporary declines are the admission price for permanent advances.

It’s absolutely critical to understand that your long-term performance depends upon how you behave during a handful of emotionally charged moments. Not hundreds. Not dozens. A handful. During maybe ten days per decade, the temporary becomes loud, frightening and unpredictable.

Those are the days that separate failed versus successful investors. That’s when your plan must show up stronger than your instincts.

This drives our investment strategy at Prosperion: to own real, enduring businesses — companies that grow profits, raise dividends and solve everyday human problems. Those rising dividends help preserve purchasing power and provide pay raises that often beat inflation. We don’t own products or chase fads. We own companies. Our clients are shareholders in businesses they understand and can explain. This clarity builds confidence — which improves behavior, especially when markets get noisy.

But even the best plan encounters human nature. After a year like 2025 — when large-cap growth sprinted ahead, smaller companies lagged, and dividend growers advanced modestly but steadily — your portfolio may look unbalanced. Human nature observes and whispers, “Why not own only the winners? Why own anything else?”

Those questions mark the birthplace of nearly every investing mistake.

Enduring wealth is built on three virtues: faith, patience and discipline:

• Faith that great American businesses will continue to innovate, grow and raise their dividends.
• Patience to endure temporary declines and frightening headlines.
• And discipline to follow your written plan, review it with intention, and resist the seductive pull of chasing whatever is working right now.

Dividend increases are the patient investor’s fuel (income). Rebalancing is the disciplined investor’s steering wheel. A long-term plan is the faithful investor’s compass.

As we step into January — a month famous for forecasts, outlooks and noise — I offer one suggestion: Make 2026 the year you stop reacting and start planning. Write your plan. Know what you own and why. Focus on businesses whose dividends outpace inflation. And let time do the heavy lifting.

Human nature may be a failed investor. But with a plan, clarity and discipline, you don’t have to be.