Peter Tuchman

I think a lot of people look at volatility and they confuse that with risk. As one example, they go, oh, a stock market is risky or investing in the S&P 500 is risky because look after 9-11 or the tech bubble or 809 or COVID, it went down 34 to 53%. That's really risky. That's really just volatility. That's things going up and down in price. Risk is really the risk of loss.

The market went down, it came back and went on to new highs every single time. There's been over 100 market corrections, drops of 10% or more. The average correction is 14%. All 100 plus had the same outcome. The market recovered and went to new highs. It's been dozens of bear markets, a drop of 20% or more. The average one's a 34% drop. Every single one, same exact outcome, recovery, new highs.

The market went down, it came back and went on to new highs every single time. There's been over 100 market corrections, drops of 10% or more. The average correction is 14%. All 100 plus had the same outcome. The market recovered and went to new highs. It's been dozens of bear markets, a drop of 20% or more. The average one's a 34% drop. Every single one, same exact outcome, recovery, new highs.

The market went down, it came back and went on to new highs every single time. There's been over 100 market corrections, drops of 10% or more. The average correction is 14%. All 100 plus had the same outcome. The market recovered and went to new highs. It's been dozens of bear markets, a drop of 20% or more. The average one's a 34% drop. Every single one, same exact outcome, recovery, new highs.

So confusing risk and volatility is one of those measures that I don't think is relevant. And I think it scares people away from investing that otherwise would do very well if they just understood, hey, this happens all the time and you get these recoveries.

So confusing risk and volatility is one of those measures that I don't think is relevant. And I think it scares people away from investing that otherwise would do very well if they just understood, hey, this happens all the time and you get these recoveries.

So confusing risk and volatility is one of those measures that I don't think is relevant. And I think it scares people away from investing that otherwise would do very well if they just understood, hey, this happens all the time and you get these recoveries.

I think when I think about metrics, I'm looking at indexes and trying to compare your returns to indexes. For example, if you're a large cap investor... The S&P 500 is an index of large company US stocks. If you're a small cap investor, the Russell 2000 is an index of small stocks. If you're using a low cost manager, you want to compare them to those indexes.

I think when I think about metrics, I'm looking at indexes and trying to compare your returns to indexes. For example, if you're a large cap investor... The S&P 500 is an index of large company US stocks. If you're a small cap investor, the Russell 2000 is an index of small stocks. If you're using a low cost manager, you want to compare them to those indexes.

I think when I think about metrics, I'm looking at indexes and trying to compare your returns to indexes. For example, if you're a large cap investor... The S&P 500 is an index of large company US stocks. If you're a small cap investor, the Russell 2000 is an index of small stocks. If you're using a low cost manager, you want to compare them to those indexes.

If you're using index based investing, which I love, then you want to make sure you're using an index that has high tracking rate. And so really being able to compare apples to apples is the best way to really measure results as an investor.

If you're using index based investing, which I love, then you want to make sure you're using an index that has high tracking rate. And so really being able to compare apples to apples is the best way to really measure results as an investor.

If you're using index based investing, which I love, then you want to make sure you're using an index that has high tracking rate. And so really being able to compare apples to apples is the best way to really measure results as an investor.

So the idea is to basically put on a piece of paper, here's where I am, here's what I'm trying to do. And based on what I'm trying to do, here are the things I should own. I should have this much in stocks, this much in bonds and so on. And here's how much I'm gonna save and put in these buckets over time. And that marries you to a plan that makes sense for you.

So the idea is to basically put on a piece of paper, here's where I am, here's what I'm trying to do. And based on what I'm trying to do, here are the things I should own. I should have this much in stocks, this much in bonds and so on. And here's how much I'm gonna save and put in these buckets over time. And that marries you to a plan that makes sense for you.

So the idea is to basically put on a piece of paper, here's where I am, here's what I'm trying to do. And based on what I'm trying to do, here are the things I should own. I should have this much in stocks, this much in bonds and so on. And here's how much I'm gonna save and put in these buckets over time. And that marries you to a plan that makes sense for you.

versus reacting to the market if you start reacting to the market then we're going to make the behavioral mistakes so one of the big ones is recency bias which is people all i remember is what happened recently like with your sports team whether they're you might feel more confident or less confident just based on what you happen to see on tv over the last couple weeks instead of maybe looking at all of the games and all of the totality of what's happened with investing we tend to look at what's happening right now and we magnify it for example

versus reacting to the market if you start reacting to the market then we're going to make the behavioral mistakes so one of the big ones is recency bias which is people all i remember is what happened recently like with your sports team whether they're you might feel more confident or less confident just based on what you happen to see on tv over the last couple weeks instead of maybe looking at all of the games and all of the totality of what's happened with investing we tend to look at what's happening right now and we magnify it for example

versus reacting to the market if you start reacting to the market then we're going to make the behavioral mistakes so one of the big ones is recency bias which is people all i remember is what happened recently like with your sports team whether they're you might feel more confident or less confident just based on what you happen to see on tv over the last couple weeks instead of maybe looking at all of the games and all of the totality of what's happened with investing we tend to look at what's happening right now and we magnify it for example

2024, the market went up most of the time. Investors became very confident and started throwing more money at the market. During COVID, the market went down. People freaked out. They started taking money out. That was a big mistake. We also have confirmation bias where we get married to certain ideas. This is why some of your conservative listeners, Nicole, might