At the risk of gushing, I am proud of you. I’m proud, because none of you (our clients) called us in panic or concern when the Dow Jones Industrial Average dropped more than 800 points on October 10.

A friend sent me a mid-day message that day: “Are your phones blowing up? People are losing their minds right now.” My message back: “You know we prepare folks to take the long view. Not one call.” As I publish this post on October 30, the market remains cranky. Who knows what’s in store in the short run? So far, Hill Investment Group clients, I remain delighted over your resolve, your mental toughness, your non-reaction when baited. Don’t get me wrong, I derive no pleasure from watching steep market declines. To an extent, I blame the media pundits. I can barely stomach the way they seize on the short-term gyrations to provide empty explanations. It grates on me to watch them leverage the market’s equivalent of a car crash, preying on our human frailties, knowing full well that fear will drive eyeballs their way. That said, there is rare advice to be mined out of the media. For example, The Wall Street Journal just released an amazing piece by UCLA behavioral economist Shlomo Benartzi, “The High Financial Price of Our Short Attention Spans.” Dr. Benartzi has so much good advice, I’d have to quote nearly the entire article to share my favorite parts. Perhaps this subhead will suffice: “Focus on the most relevant information, not the most available.” Or this: “Your biggest mistakes will come from overreacting to the latest stock swings, not underreacting.” Now, go read the rest (by clicking the link above). One way we strive to keep our clients on course here at HIG when others are “losing their minds” is to remind them of these simple, but powerful lessons:

1. Allocate intentionally. Your asset allocation was a decision we made together, based on the mix most likely to help you achieve your unique goals. Any random day (or month, or even year or few) shouldn’t change that.
2. Diversify globally. Your globally diversified portfolio typically includes roughly 12,000 stocks from the US and beyond. You’re already set to receive appropriate exposure to risks and expected returns from worldwide markets.
3. Rebalance habitually. Rebalancing sounds easy, but it takes guts, and is hugely important. It’s as close as we get to leveraging market moves, trimming high-flying asset classes (selling high) and restoring recent underdogs (buying low), according to your personalized portfolio plans.
4. Take the Long View.® Everything we do is about putting the math on your side. What happens in the short run is tough to predict. But we know what the science of investing says, and we’ve built your portfolio accordingly.

Combined, these four principles suggest that simple discipline may be the most important ingredient of all in becoming a world-class investor. I couldn’t tell you whether we’ve just experienced a random blip or the beginning of a bigger correction. But I am confident that we’ve prepared our clients for either outcome, and nearly any other permutation we may encounter.

Dave Goetsch – The name may not be instantly familiar, but you’ve probably heard of the CBS sitcom he produces: “The Big Bang Theory.” Like his show, Goetsch’s personal investing has had its share of twists and turns. Reflecting on how he felt back in 2009, he says, “When the market went down, I went down with it—sinking into a depression, knowing there was nothing I could do.”

Fortunately, between then and now, he discovered an evidence-based investment approach. Armed with the durable philosophy he lacked at the time, Goetsch has leveraged his past trauma as a learning experience, and now feels better prepared for future downturns.

These days, Goetsch is proud to help spread the evidence-based investing word along with us. “I changed because I learned that there was a different way to think about investing. … The return I’m talking about is how I feel every day. I worry less—not just about the future, but also about the present. Of course, I know that there are no guarantees when it comes to investing, but I feel like I’m going to be okay. I have a plan.”

To read Dave’s observations in his own words, click here: “Now and Then.”

In the wake of February’s recent market volatility (after a nice, long lull), we thought this would be a good time to remind our readers how unusual it is for markets to deliver their “normal” average returns in any given year.

For example, while the S&P 500 index has delivered average returns of around 10% per year since 1926, the six orange dots in our “Illustration of the Month” below are the only years it’s actually toed the line of its long-term average.

What’s the real “norm”? Expect volatility far more often than not along the road to future growth.