Build your financial plan with strategies, not stories

Last year was not a normal year. In some measures, it had been decades since a year like 2017 occurred in terms of low U.S. stock market volatility.

Since the first of the year, the stock markets have certainly resumed their level of normalcy in terms of volatility. This past week we saw another big swing in markets. I’m sure some investors don’t like it, but it’s the reality of investing.

Perspective matters. For example, if given two options, which would you prefer?

The market:

  1. Drops 700 points, or
  2. Goes down by only 2.5%.

This is a trick question since they’re essentially the same thing in today’s markets. This happened in early February to the Dow Jones industrial average and happened again just this month. This may seem like a big deal but it’s not.

It’s really important to frame the stories you hear correctly so you don’t succumb to emotional reactions with your long-term wealth. The media in their devilish ways highlight, “700 points! Look out!” to inspire fear, which then inspires you to tune into their channels so you can listen to their often ridiculously and generally disingenuous dribble.

They offer little in terms of solutions, but a lot of inspiring “feelings.”

Notably volatility like February and March feels like a lot because the last time such high volatility showed up was about two years ago. To put the early-February or late-March market movement in perspective, if a 665–700 point drop happened two years ago at the Dow Jones industrial average levels then it would have meant an almost 4–5% swing on the market; however, today that same number is only 2–2.5%, and 2.5% is hardly unexpected.

Today’s volatility, albeit not enjoyable, is a statistically expected experience in any given year. While newsworthy, it should not be something you need to react to.

Historically speaking, movements of 1–2% (yes, today that means about 250–500 points) should be expected in any given year. That alone should be enough to appreciate that what has been going on in the first quarter of 2018 is not just normal, but should have been expected a long time ago.

It’s quite common for annual market pullbacks well north of 10%. The average intra-year pullback is about 13–14%, yet the market over time is upward sloping — “investing for the long-term” is a repeated mantra for good reason.

The probability of a bear market or pull back in a long-term portfolio is basically a certainty in an long-term investor’s lifetime, but the probability of predicting when — and then exploiting it profitably — is likely zero.

Long-term means long like decades, not simply years.

Planning is all about preparation, controlling for what you can control, and building reasonable expectations around what you can’t control.

Because of all of this, I repeat two sensible recommendations on a regular basis:

  1. Don’t drive decisions with emotions or bad behavior. The serious risks all wealth faces are inflation, deflation, confiscation, devastation, and bad behavior. We can diversify to partially offset inflation and deflation. We are fortunate to live in a country where confiscation and devastation are unlikely, or at least usually insurable. Only you can control your behavior, so practice good saving, control spending, take care of insurance and estate planning, and keep your emotions in check.
  2. Strategy should drive investing, not acting on rhetoric or stories. Most everything you watch on TV, read in retail publications, glean as a “tip” from friends or people you network with, or “hear about” (especially if it’s free!) are rhetoric and stories looking to extract wealth from you rather than build it. “Strategies” are designed to build wealth for you; “stories” are often designed to transfer wealth away from you. Know the difference!

There is no certainty in the world. Markets don’t care about your feelings, goals, or perception of things. You need to know about them though. So get your perspective of those things straight and your plans back under your control, so your perspective on the markets can be sensible and informed.



MICHAEL DUBIS is a fee-only CERTIFIED FINANCIAL PLANNER™ and president of Michael A. Dubis Financial Planning, LLC. He previously served as lecturer at the University of Wisconsin Business School James A. Graaskamp Center for Real Estate. Mike can be reached at

This article contains the opinions of the author. The opinion of the author is subject to change without notice. All materials presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This article is distributed for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services described in this website or that of the author’s.

Mike Dubis does not guarantee the relevancy, appropriateness, or accuracy of any outside information or links. Mike Dubis does not render or offer to render personalized investment advice or financial planning advice through this medium. All references that might be made to an investment or portfolio's performance are based on historical data and one should not assume that this performance will continue in the future.


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Michael A. Dubis Financial Planning, LLC), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Michael A. Dubis Financial Planning, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Michael A. Dubis Financial Planning, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Michael A. Dubis Financial Planning, LLC’s current written disclosure statement discussing our advisory services and fees is available for review upon request. If you are a Michael A. Dubis Financial Planning, LLC client, please remember to contact Michael A. Dubis Financial Planning, LLC, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services.

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