The biggest impediment to a successful investment experience is the investor’s behavior – reacting to news about the market and making bad decisions.

1. Investor Discipline
I. Humans Are Not Wired for Disciplined Investing
II. Many Investors Follow Their Emotions
III. Reacting Can Hurt Performance
IV.Markets Have Rewarded Discipline
V. Focus on What You Can Control
1

2. Humans Are Not Wired for
Disciplined Investing
2
When people follow their
natural instincts, they tend
to apply faulty reasoning
to investing.

3. Many Investors Follow Their Emotions
3
People may struggle to separate their emotions
from their investment decisions.
Following a reactive cycle of excessive optimism and
fear may lead to poor decisions at the worst times.

4. Reacting Can Hurt Performance
4
Performance of the S&P 500 Index, 1970-2015
In US dollars. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Performance data for January 1970–August 2008 provided by CRSP; performance data for September
2008–December 2015 provided by Bloomberg. S&P data provided by Standard & Poor’s Index Services Group. Bonds, T-bills, and inflation data provided by Morningstar. The information shown here is derived from such indices, bonds, T-bills, and inflation data.
Missing only a few days
of strong returns can
drastically impact
overall performance.
Total
Period
Missed
1 Best
Day
Missed
5 Best
Single
Days
Missed
15 Best
Single
Days
Missed
25 Best
Single
Days
One-
Month
US T-Bills
Annualized
Compound Return 10.27% 10.01% 9.24% 7.95% 6.87% 4.94%
$89,678
$80,370
$58,214
$33,710
$21,224
$9,195
Growthof$1,000

5. Markets Have Rewarded Discipline
5
Growth of a dollar—MSCI World Index (net dividends), 1970–2015
In US dollars. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. The information shown here is derived from the index. MSCI data © MSCI 2016, all rights reserved.
$0
$1
$10
$100
$43
US
home
prices
hit
bottom
Fiscal
cliff
worries
Euro zone
debt
crisis
S&P 500
down 46%
Subprime
mortgage
crisis
Hurricanes
Katrina
and Rita
Iraq
war
begin
s
Dotcom
stock
crash
9/11
terrorist
attack
Y2K
Scar
e
Russian
financial
crisis
Asian
currency
crisis
Incom
e tax
rates
rate
Iraq
invades
Kuwait
Savings
and loan
crisis
Dow drops
23% on Black
Monday
US
inflatio
n at
13.5%
BusinessWeek:
“The Death of
Equities”
Gold hits
record high
S&P 500
down
43%
Oil prices
quadrupl
e
Arab oil
embargo
1970 1980 1990 2000 2010 2013
1
A disciplined investor looks beyond the
concerns of today to the long-term growth
potential of markets.
$0
$1
$10
$100
$45
US
home
prices
hit
bottom
Fiscal
cliff
worries
Eurozone
debt
crisis
S&P
500
dow
n
46%
Subprime
mortgage
crisis
Hurricanes
Katrina
and Rita
Iraq
war
begin
s
Dotcom
stock
crash
9/11
terrorist
attacks
Y2K
Scar
e
Russian
financial
crisis
Asian
currency
crisis
Incom
e tax
rates
rise
Iraq
invades
Kuwait
Savings
and
loan crisis
Dow drops
23% on
Black Monday
US inflation
at 13.5%
BusinessWeek:
“The Death
of Equities”
Gold hits
record high
S&P 500
down
43%
Oil prices
quadrupl
e
Arab oil
embargo
1970 1980 1990 2000 2010 2015

6. Focus on What You Can Control
6Diversification neither ensures a profit nor guarantees against loss in a declining market.
No one can reliably forecast
the market’s direction or predict
which stock or investment
manager will outperform.
A financial advisor can help
you create a plan and focus
on actions that add value.
Creating an
investment plan to fit
your needs and risk tolerance
Structuring a portfolio around
dimensions of returns
Diversifying broadly
Reducing expenses and turnover
Minimizing taxes