Your Plan (and Behavior) Matter More Than the Headlines

Early in each year, I like to refocus on what actually drives long-term investment success. The highest returns aren’t from correctly guessing what the market will do, and they certainly don’t come to investors who react to the day’s loudest headline. The biggest success determinant has nothing to do with cleverness or timing. Instead, it has everything to do with having a plan and sticking to it.

Amid all the noise in today’s world, it’s easy to get distracted from the foundation of your financial plan. By returning to those core principles, you can recalibrate to your highest priorities, both for now and the future.

To that end, our investment philosophy rests on a few simple, time-tested beliefs that I like to revisit every year. They aren’t exciting. They don’t dominate headlines. But I believe they show a demonstrated history of long-term success.

First, we are long-term, goal-focused, plan-driven investors. A portfolio’s purpose isn’t to beat an index this quarter or anticipate where the economy will be six months from now. Its purpose is to fund a life — to provide retirement income, support legacy goals, enable generosity, and create flexibility. Everything else is secondary.

Second, neither the economy nor the stock market can be forecast with any consistency. If they could, the same people would be right every time. They aren’t. Markets often rise when the news is bad and fall when the news is good. There’s no reliable pattern to how markets are “supposed” to react. Headlines explain the past far better than they predict the future.

Third, the most important principle of all: The only way to earn the long-term returns that equities have historically delivered is to endure their temporary declines. Volatility is the price of admission.

Charlie Munger captured this perfectly when he said the first rule of compounding is to never interrupt it unnecessarily. Yet most investors do exactly that. They panic during declines or chase what has already gone up. Instead, they should focus on their long-term goals. Have those priorities changed? If not, the plan remains intact. A good plan endures volatility but can be easily disrupted by bad behavior. Portfolios don’t need constant tinkering; they need patience.

Fourth, like Warren Buffett, we define our favorite holding period as “forever.” Time allows great businesses to do what they do best: Grow earnings, raise dividends, and compound value. That’s why we emphasize owning high-quality companies that generate real profits and steadily grow their dividends.

Those dividends matter because they do two powerful things. They provide increasing tangible, spendable cash flow, and they impose discipline on management teams. A company that consistently raises its dividend must generate real earnings, not just exciting narratives. Over time, those rising dividends often become the most reliable component of total return. Prices fluctuate, but dividends compound.

Fifth, there is always something to worry about. Last year’s dominant question was whether inflation would spiral out of control. Before that, it was whether rate hikes would break the economy. Before that, whether a recession was imminent. The universal “burning question” is almost always the wrong one because it distracts investors from what actually matters. Long-term investors don’t need answers to today’s loudest question. They need a portfolio built to endure uncertainty.

Sixth, markets don’t move in straight lines, and they never have. It’s true that today’s market is more concentrated than usual, with a handful of very large technology companies driving index returns. That deserves attention, but it should not invite panic. Valuation has never been an effective market-timing tool. Expensive markets can stay expensive longer than skeptics expect.

If history is any guide, the next major market shock won’t come from the risk on everyone’s mind, but instead from “left field.” Markets are very good at pricing known risks and very poor at anticipating unknown ones. When the next shock arrives (and it will), it will feel urgent, frightening and unprecedented. And it will pass, just like the others.

After nearly five decades advising families, I’ve reached a simple conclusion: Most investors don’t fail because markets fail. They fail because they abandon discipline. They convert to cash during panics or chase fads during manias. They convince themselves that this time is different. But it never is.

I believe investing should focus on owning productive businesses, reinvesting dividends, and allowing compounding to do its work. The challenge isn’t knowing what to do; it’s having the temperament to keep doing it year after year.

As we move into 2026, stay focused on long-term goals. Seek to own quality businesses, emphasize growing income, and refuse to let noise interrupt compounding.

In the end, successful investing isn’t about being smarter than the market. It’s about building a great plan and sticking to it.