On Staying Invested
Why systems beat willpower when markets drop and how to build them.
On Staying Invested
Key Takeaways
- Missing the market’s 10 best days between 1985 and 2020 drops annual returns from 11.4% to 8.5%, and those best days almost always come right after crashes
- Psychology alone won’t hold you when fear strikes. You need automated contributions, automatic rebalancing, and friction for selling
- Track progress toward your actual goal (“Am I on track for retirement in 2045?”) instead of daily returns. This single shift changes everything
The Gap Between Knowledge and Feeling
You know the advice. Stay invested. Don’t sell in a downturn. Think long-term.
Then the market drops 15%. Your stomach lurches. Your finger hovers over the sell button. All that logic feels naive.
The gap between what we know and what we feel is vast. And that gap is where wealth goes to die.
Why Your Brain Fails at Long-Term Investing
Your brain is doing what it evolved to do, and that’s the problem. The same equipment that helped your ancestors survive predators is making your investment decisions. It fails catastrophically at that job.
Present bias makes today’s problems loom larger than future gains. A 10% portfolio drop feels catastrophic now, though history promises recovery. The recovery is theoretical. The loss is real. Your brain doesn’t think in decades. It thinks in the next few weeks.
Loss aversion means losses sting roughly twice as hard as equivalent gains feel good. A €5,000 loss hurts more than a €5,000 gain feels pleasant. Your brain treats losses as emergencies demanding immediate action.
Recency bias treats recent months as permanent. Three months of drops and your brain believes recovery is impossible. Three months of gains and you think the surge will forever continue. Both are equally false.
The Data on Staying Invested
Missing the market’s 10 best days between 1985 and 2020 drops your annual returns from 11.4% to 8.5%. Missing the 20 best days puts you at 6.7%.
The brutal part? Those 10 best days almost always come right after the market’s worst crashes. They happen when everyone’s panicking and selling.
You cannot predict when those best days will come. You can only ensure you’re there when they do. And the only way to do that is staying fully invested.
The investors who get rich aren’t the ones who timed the market perfectly. They’re the ones who stayed invested through the downturns. 2008, 2020, the corrections of 2022. The pattern repeats.
Building Systems That Keep You Invested
Psychology alone won’t hold you when fear strikes. You need systems that make staying invested automatic.
Set up automatic contributions. Every month, your paycheck feeds into your investments whether the market is up or down. Dollar-cost averaging is brilliant here: when markets are down, you’re buying more shares cheap; when markets are up, you’re buying fewer shares expensive. Over time you win. But more importantly, you remove the question of when to invest. Your emotions never get a vote.
Set up automatic rebalancing. If your goal is 60% stocks and 40% bonds, rebalancing forces you to sell winners and buy losers through rule-based discipline, not emotion. It makes you do the opposite of what fear demands.
Create friction for selling. If selling requires you to type a password, wait 48 hours, and document your reasoning, you’re far less likely to panic sell. Keep your long-term portfolio separate from money you might trade. Make sales feel like a big decision, because they should be.
Goal-Based Tracking Changes Everything
Instead of tracking daily returns, track progress toward your actual goal. Not “how much did I make today?” Instead, “am I on track for retirement in 2045?”
These are completely different questions.
Down 10% this month? If you’re 25 years from retirement with a €500,000 goal, you might still be ahead of plan. A down month is noise in a long climb.
A traditional tracker shows a number your brain treats as a scorecard. Negative numbers feel like failure. You’re measuring yourself against an arbitrary number and losing.
Goal-based tracking flips the frame. You’re reaching a specific goal by a specific date. When your tracker shows you’re on track, a down market becomes information, not catastrophe.
Think in Decades, Not Days
Weekly balance checks make every 2% move feel significant. Zoom to 10 years and daily swings vanish into noise.
The best investors rarely check prices. Some see their portfolio once yearly. Ask yourself: if you could only check by mail once annually, would temporary dips still feel catastrophic?
They wouldn’t. The problem isn’t the market. It’s checking constantly.
Signal vs. Noise
Signal is information that actually matters: asset allocation, contribution rate, time horizon.
Noise is everything else: this week’s market direction, the news cycle, your friend’s performance.
When you feel compelled to act, ask whether it changes your actual financial situation. If not, it’s noise. Ignore it.
Psychological Compounding
Every time you weather a downturn and experience the recovery, you gain confidence. You collect evidence that your plan works.
An investor who lived through 2008, 2020, and other crashes feels calm during downturns in a way a new investor simply cannot. They’ve seen the pattern repeat. They know what happens next.
The game of investing isn’t about picking winners. It’s about managing yourself. The stock market has returned roughly 10% annually over the past century. The average investor has captured far less. Bad stock picks aren’t the problem. Poor market conditions aren’t the problem.
Selling at the wrong time, driven by emotion: that’s the killer.
Build systems that remove the decision-making. Track progress toward goals, not daily returns. Automate everything. Then give it time.
One year of ups and downs tells you nothing. Ten years tells you whether you made the right call.
Gallio shows you whether you’re on track for your actual goals, not whether the market had a good week. When you know your future is secure, staying invested becomes easy.
On Staying Invested
Key Takeaways
- Missing the market’s 10 best days between 1985 and 2020 drops annual returns from 11.4% to 8.5%, and those best days almost always come right after crashes
- Psychology alone won’t hold you when fear strikes. You need automated contributions, automatic rebalancing, and friction for selling
- Track progress toward your actual goal (“Am I on track for retirement in 2045?”) instead of daily returns. This single shift changes everything
The Gap Between Knowledge and Feeling
You know the advice. Stay invested. Don’t sell in a downturn. Think long-term.
Then the market drops 15%. Your stomach lurches. Your finger hovers over the sell button. All that logic feels naive.
The gap between what we know and what we feel is vast. And that gap is where wealth goes to die.
Why Your Brain Fails at Long-Term Investing
Your brain is doing what it evolved to do, and that’s the problem. The same equipment that helped your ancestors survive predators is making your investment decisions. It fails catastrophically at that job.
Present bias makes today’s problems loom larger than future gains. A 10% portfolio drop feels catastrophic now, though history promises recovery. The recovery is theoretical. The loss is real. Your brain doesn’t think in decades. It thinks in the next few weeks.
Loss aversion means losses sting roughly twice as hard as equivalent gains feel good. A €5,000 loss hurts more than a €5,000 gain feels pleasant. Your brain treats losses as emergencies demanding immediate action.
Recency bias treats recent months as permanent. Three months of drops and your brain believes recovery is impossible. Three months of gains and you think the surge will forever continue. Both are equally false.
The Data on Staying Invested
Missing the market’s 10 best days between 1985 and 2020 drops your annual returns from 11.4% to 8.5%. Missing the 20 best days puts you at 6.7%.
The brutal part? Those 10 best days almost always come right after the market’s worst crashes. They happen when everyone’s panicking and selling.
You cannot predict when those best days will come. You can only ensure you’re there when they do. And the only way to do that is staying fully invested.
The investors who get rich aren’t the ones who timed the market perfectly. They’re the ones who stayed invested through the downturns. 2008, 2020, the corrections of 2022. The pattern repeats.
Building Systems That Keep You Invested
Psychology alone won’t hold you when fear strikes. You need systems that make staying invested automatic.
Set up automatic contributions. Every month, your paycheck feeds into your investments whether the market is up or down. Dollar-cost averaging is brilliant here: when markets are down, you’re buying more shares cheap; when markets are up, you’re buying fewer shares expensive. Over time you win. But more importantly, you remove the question of when to invest. Your emotions never get a vote.
Set up automatic rebalancing. If your goal is 60% stocks and 40% bonds, rebalancing forces you to sell winners and buy losers through rule-based discipline, not emotion. It makes you do the opposite of what fear demands.
Create friction for selling. If selling requires you to type a password, wait 48 hours, and document your reasoning, you’re far less likely to panic sell. Keep your long-term portfolio separate from money you might trade. Make sales feel like a big decision, because they should be.
Goal-Based Tracking Changes Everything
Instead of tracking daily returns, track progress toward your actual goal. Not “how much did I make today?” Instead, “am I on track for retirement in 2045?”
These are completely different questions.
Down 10% this month? If you’re 25 years from retirement with a €500,000 goal, you might still be ahead of plan. A down month is noise in a long climb.
A traditional tracker shows a number your brain treats as a scorecard. Negative numbers feel like failure. You’re measuring yourself against an arbitrary number and losing.
Goal-based tracking flips the frame. You’re reaching a specific goal by a specific date. When your tracker shows you’re on track, a down market becomes information, not catastrophe.
Think in Decades, Not Days
Weekly balance checks make every 2% move feel significant. Zoom to 10 years and daily swings vanish into noise.
The best investors rarely check prices. Some see their portfolio once yearly. Ask yourself: if you could only check by mail once annually, would temporary dips still feel catastrophic?
They wouldn’t. The problem isn’t the market. It’s checking constantly.
Signal vs. Noise
Signal is information that actually matters: asset allocation, contribution rate, time horizon.
Noise is everything else: this week’s market direction, the news cycle, your friend’s performance.
When you feel compelled to act, ask whether it changes your actual financial situation. If not, it’s noise. Ignore it.
Psychological Compounding
Every time you weather a downturn and experience the recovery, you gain confidence. You collect evidence that your plan works.
An investor who lived through 2008, 2020, and other crashes feels calm during downturns in a way a new investor simply cannot. They’ve seen the pattern repeat. They know what happens next.
The game of investing isn’t about picking winners. It’s about managing yourself. The stock market has returned roughly 10% annually over the past century. The average investor has captured far less. Bad stock picks aren’t the problem. Poor market conditions aren’t the problem.
Selling at the wrong time, driven by emotion: that’s the killer.
Build systems that remove the decision-making. Track progress toward goals, not daily returns. Automate everything. Then give it time.
One year of ups and downs tells you nothing. Ten years tells you whether you made the right call.
Gallio shows you whether you’re on track for your actual goals, not whether the market had a good week. When you know your future is secure, staying invested becomes easy.