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Brains, bonds, and thinking long-term.

April 7, 2025

Sir John Templeton once famously quipped "the four most dangerous words in investing are 'This time it's different.'"

The human brain is hard-wired for short-term problem-solving. This has been key to our survival as a species. Our ancestors who instinctively fled from predators most certainly outlasted those who took time to admire the tiger's stripes.

Only recently have we made progress in considering the long-term impact of short-term reasoning. Unsurprisingly, we’re not always very good at it. In a 2006 NPR Interview Harvard psychologist Daniel Gilbert, author of Stumbling Into Happiness, said the following:

"We can look ahead to our retirements or to a dental appointment, and we can take action today to save for retirement or to floss so that we don't get bad news six months down the line. But we're just learning this trick. It's really a very new adaptation.”¹

This cognitive inexperience gets us into trouble when it comes to investing, where thinking in the long-term is key.

Thankfully, as a client of One Day In July, you’re not alone in the evolutionary wilderness. Our approach to investing takes decades of research into account and is designed to help you navigate uncomfortable stretches like we’ve had recently.

How so? By focusing on long-term investor fundamentals. Among these:

• Holding a diversified basket of index funds. As a client of One Day In July, you are invested across the US equities market, with a stake in thousands of different companies. While many have fallen in value recently, it’s anyone’s guess which ones will recover value in the long run. By being diversified, you avoid having to gamble that any one firm will drive growth down the road.
• Holding US Treasuries. As the world’s largest and most liquid bond market, these are among the safest assets during a financial downturn and are a key component of any ODIJ portfolio.
• Investing (and reinvesting) in dividend-yielding ETFs– Historically, dividends have exhibited more stability than stock market returns.² As cash comes into your portfolio, we can use it to purchase securities that are more favorably priced.
• Tax-loss harvesting: for investors with individual brokerage positions, we can harvest losses out of your portfolio and use these losses to offset income and capital gains down the road.
• And above all: Avoiding panic and trying to time the market – when we see our assets losing value, the natural temptation is to put everything under the mattress. While this feels reasonable, it ignores a fundamental, uncomfortable truth in investing: absolutely no one knows when the market is going to go back up. In fact, most long-term results are realized in very short amounts of time. One analysis shows that from 1961 to 2015, just 81 trading days made up nearly all the returns of the S&P. Put another way, if you weren’t invested during these 81 days, your returns over more than six decades would have averaged 0.03% a year.³ Patience in the market has traditionally rewarded most long-term investors despite bouts of painful turbulence.

So what should you do? Talking helps. If you are feeling anxious about your investments, reach out to your advisor. Good investing requires patience, persistence, and long-term thinking. We’re here to help remind you of these fundamentals.

- Seth Gillim

1. Gilbert, D. (2006, July 3). Humans wired to respond to short-term problems [Radio broadcast transcript]. NPR. https://www.npr.org/2006/07/03/5530483/humans-wired-to-respond-to-short-term-problems
2. https://media.onedayinjuly.com/media/pdf/2024_ODIJ_Cash_Flowing.pdf
3. Antoons, W. (2018). Market Timing: Opportunities and Risks. CAIA Association. https://caia.org/sites/default/files/market_timing_open.pdf