You know nothing—Embrace that and you’ll earn a decent return

Suppose you’ve been in the markets a while. You’ve made some good money. You figure—ah, good ol’ fashioned capitalism, companies earning a profit, investors getting their taste, I love it. And then the market tumbles and has you questioning everything you’d assumed up to that point.

Remember: The reason you stand to earn an extra return in securities like stocks is because they pose risk. We’re not just talking about a stock selling off because the company’s results fall shy of Wall Street’s expectations. We’re talking systematic risk: the market selling off en masse and taking your holdings down with it. No escape. It happens more often than you might guess.

Instead of thinking you need to reassert control in situations like those—maybe by selling things off and going to cash—do the opposite. Use it as a learning moment, the lesson being that you were never in control to begin with. You are at the market’s whim, and that’s why you get paid—not because you knew better than someone else.

You were investing in stocks because there was a patchwork system of agreements and treaties that engendered global trade? Because barriers to commerce had come down, forging a union of export-driven developing economies and consumption-led developed markets? Nah, you weren’t. You were investing in stocks because you had a reasonable belief they’d earn you a decent return in aggregate over the long haul, even if you couldn’t specifically articulate, let alone know, how or why (besides “earnings”).

If you think I’m exaggerating, check this out:

What you’re looking at is the S&P 500’s top 10 holdings as of March 31, 2025. I’ve compared their recent weightings to their weightings 20 years prior. Yes, there are cases like Berkshire, where the stock existed but wasn’t an S&P constituent for technical reasons. But some of these firms—Meta Platforms, Broadcom, and Tesla—didn’t even exist in March 2005!

The point? Some of today’s market bulwarks were mere specks 20 years ago. And, so, in another two decades, it’s a good bet we’ll look back and marvel at the market’s capacity to create wealth in ways and from sources that would have seemed inconceivable to us now. We don’t know where it’ll come from or why.

The corollary to that is it’s best to give a wide berth to those who profess to know what might be around the corner. Sure, I have talented colleagues here who do a valiant job of helping investors make sense of what’s going on around them and putting it into useful context. But the way events play out in the near to intermediate term is unpredictable, and how those events translate into investment outcomes is unknowable altogether.

That might sound defeatist, but humility isn’t weakness. It’s strength. It empowers us to focus on what we can control—devising a plan that meets our goals, allocating our assets in ways that align with those objectives, widely diversifying each sleeve of the portfolio and rebalancing to manage risk, keeping fees and trading to a minimum—and not sweat what we can’t.

Do that, and you’ll make good money in markets, consistent with your goals, come what may.

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