Bonus Edition: The Calm Before Stay Calm

The official publication of my book Stay Calm is nearly here—a moment I’ve been anticipating for years. I’m looking forward to the opportunity to help people feel calmer and more confident about investing.

Ahead of the book's release tomorrow, I want to share a sneak peek with subscribers:

Stay Calm isn’t a book about how to invest. It’s a book about how to think about investing. It’s not about picking stocks; it’s about taking stock of what really matters. I don’t offer a formula for predicting which of the thousands of publicly traded companies will go up and which will go down. That’s because there is no formula.

What is there, then? A sensible, evidence-based, long-term investing strategy that has been shown to help millions of people maximize the hard-earned money they’ve saved over their lifetimes—one that doesn’t require them to make predictions or time the market.

This is bad news for those active investors who claim to have some “magic,” who think they know more about prices than the market itself. It’s good news, however, for the rest of us. And while this new mindset can give you the best chance of achieving financial success, some of its most valuable returns go beyond dollars and cents. Among them is a liberating sense of calm that allows us to spend more time on what we love doing instead of matching our moods to the ups and downs of the market.

I was exposed to these groundbreaking ideas as a graduate student at the University of Chicago in the late 1960s. I sat in Professor Gene Fama’s class and learned about the efficient market hypothesis. This idea explains that markets incorporate new information into prices in real time, making it tough even for professionals to outguess the market after costs are factored in. Armed with this new perspective, I jumped at the opportunity in 1971, at age twenty-four, to help develop one of the first index portfolios. At the time, index investing was considered a radical experiment. Investing meant picking stocks, timing the market, and hoping to buy low and sell high. I took a different path. In fact, I’ve never bought an individual stock in my life.

Back then, the concept of “trusting the market” didn’t yet exist. But this new research suggested a simpler, more reliable path: Instead of trying to outguess the market by picking winners, own the whole market for a long time and let it work for you.

Of course, investing isn’t solely about the numbers in your account; it’s also about how you feel along the way to your goals. In my early years as an investor, I’ll admit I was as preoccupied with the ups and downs of the market as anyone else. But as I embraced a new investment philosophy based on science, I started to spend my time differently: less worrying about day-to-day market noise and more thinking about long-term goals. I stopped trying to predict every twist and turn, and I started focusing on what I could control: things like how much to save, how to allocate my investments, and how to react (or not react) when markets got volatile. By investing my time and money in a more disciplined way, I found that my investment outcomes improved and my life stress diminished. I want more people to have the tools to help them stay calm while staying invested in the market. That’s a big part of why I wrote this book.

One more thing: As a special thank you for being a subscriber, I’m offering a limited-time discount code if you want to share the book’s message of science-based hope with friends and family. Use code STAYCALM15 at Bookshop.org.

Stay calm, stay invested, and let markets work for you.

David