Behavioral finance Archives | TAGStone Capital, Inc.

June 2, 2026June 3, 2026

When families come to us, the conversation usually starts with numbers — accounts, balances, projections, tax brackets. But the more time we spend together, the more another conversation surfaces: the one about how each person thinks about money in the first place.

Psychologist Dr. Brad Klontz calls these underlying beliefs our money scripts — unconscious rules about money that we absorb early in life, usually from family, and then carry into adulthood without ever revisiting them. Some serve us well; others quietly steer us off course. Most of us don’t know we’re running them.

“The problem is that we take these beliefs for granted as adults, and we rarely go back and examine them, let alone decide to change them,” Klontz says. “Instead, they’re kind of like an actor’s script in a movie; we just continue to read the lines in our heads…and believe that they’re true, when in fact, they are often quite distorted and limit our success.”

The good news: once you can name your money script, you can decide whether to keep following it.

Why scripts get written in the first place

Most money scripts are inherited. A parent who grew up with scarcity might raise a child who equates spending with danger, hoarding savings they never feel free to use. A household where one big raise or windfall changed everything can produce adults who treat money as the answer to every problem. Research from the UK found that children who were raised in households where spending was secretive were more likely to develop hoarding and other compulsive money habits as adults.

These patterns aren’t character flaws. They’re scripts — written by experience, performed automatically.

The four most common scripts

Klontz and his colleagues have grouped money scripts into four broad patterns. Few people fit neatly into one. Most of us carry pieces of each, with one or two pulling harder than the others.

Money status. Self-worth gets tied to net worth. People in this pattern may overspend to project success — the right car, the right address, the right watch. They may round up when describing their income or keep purchases hidden from a spouse. The underlying belief: what I have signals who I am.
Money worship. Money is treated as the path to happiness, freedom, and security. The belief that “if I just had more, the problem would go away” keeps the goalposts moving. This script often shows up in high earners who keep working past the point where additional income changes anything — because the script says it should.
Money avoidance. Wealth itself is viewed as suspect or even shameful. People with strong avoidance scripts may sabotage their own accumulation, give too much away, or simply refuse to look at statements. Underneath is often the quiet belief that I don’t deserve to have money, or that having it makes someone a worse person.
Money vigilance. Money is treated as a tool to be managed carefully. Vigilant savers tend to be frugal, private about finances, and uncomfortable spending on themselves — even when spending is clearly warranted. The strength of this script is discipline. The cost is often a reluctance to enjoy what they’ve worked to build.

These categories sound extreme on purpose. Read straight through, none of them are particularly flattering. But that’s the point — extremes are easier to recognize than nuance. In reality, we likely contain a bit of each of these patterns to varying degrees. Some may pull stronger than others, and some that sound overtly negative may offer strengths. For example, a money vigilant saver might also have a little money status running underneath, which is why the same person who clips coupons all year may also buy the flashier car. Both scripts are operating; both are inherited; both can be examined.

Why this matters for planning

With an understanding of the most common money scripts under your belt, you’re equipped to start keeping an eye out for where echoes of each appear in your own life in positive and negative ways. This identification process is important, because it allows you to move away from tendencies that don’t serve you well and toward those that do. In the second part of this series, we’ll offer strategies for flipping the script on these common behaviors and exploring your own personal money scripts. Stay tuned!

And in the meantime, we’re here to answer questions or offer strategies that can help you better reach your long-term financial goals. Reach out anytime — we’re always glad to start that conversation.

1. Confirm your beneficiary designations

Most of your assets pass under your will or trust. But a meaningful share — retirement accounts, life insurance, certain annuities — passes by beneficiary designation, which overrides whatever your will says. That makes these designations one of the most common sources of unintended outcomes.

Check that named beneficiaries still reflect your wishes. Common red flags: an ex-spouse still listed on a 401(k), a deceased relative as a sole beneficiary (which can force the asset through probate), or a custodian arrangement for a child who is now an adult. Most custodians let you update beneficiaries online in a few minutes. It’s one of the highest-leverage estate planning tasks you can do.

2. Revisit your fiduciary appointments

Your fiduciaries — trustees, executors, agents under power of attorney, health care proxies — are the people who carry out your wishes when you can’t. The right choice ten years ago may not be the right choice today. (We walk through each of these documents in The Core Four.)

Health changes, deaths, and shifting relationships are obvious reasons to update. Less obvious: a sibling you named when your children were small may now reasonably be replaced by an adult child. Check in with named fiduciaries each year — and after any plan update — to confirm they’re still willing and able to serve. Don’t forget the backups.

3. Make sure your trust is actually funded

A revocable trust only works for the assets that are titled in its name. We see this often: a client signs a trust, then buys a new home, opens a new brokerage account, or inherits property — and never retitles it. Those assets bypass the trust and often head straight to probate, defeating one of the main reasons the trust exists. Kiplinger has a useful primer on which assets belong in a revocable trust if you want a refresher on the categories.

Each year, walk through your asset list and confirm everything intended for the trust is properly titled. Real estate, business interests, and non-retirement financial accounts are the usual suspects. (Retirement accounts generally stay in your name with beneficiary designations rather than being retitled into the trust.)

4. Reflect recent life changes

Marriages, divorces, births, adoptions, and deaths in the family are all triggers for a plan review. So are larger financial shifts — the sale of a business, a meaningful inheritance, or a significant change in your overall net worth.

Two reminders that often get overlooked. First, moving to another state matters. Estate and probate rules vary, and community property states have particular rules around spousal rights to retirement assets. Second, federal tax law changes can meaningfully alter the calculus on lifetime gifting, the estate tax exemption, and trust structures. When Washington moves, it’s worth checking whether your plan still does what you think it does.

5. Store documents securely — and accessibly

A plan no one can find is a plan that doesn’t work. Originals of your will, trust, powers of attorney, and health care directives need to be stored somewhere safe and somewhere your fiduciaries can actually get to them when the time comes.

A fireproof home safe or your attorney’s secure storage are usually better choices than a bank safe deposit box, which can require a court order to access after death. Digital copies are useful for reference, but courts and financial institutions generally require originals with wet signatures.

Your fiduciaries don’t need a complete list of account numbers. They generally need to know which institutions hold your assets — with that, a death certificate and your Social Security number are usually enough to identify everything.

Estate planning is a process, not an event

Most annual reviews are short. But a regular cadence is what makes the bigger updates — after a major life change, a relocation, or a tax law shift — feel routine rather than overwhelming. For the procedural side of what your family will face after you’re gone, our estate planning framework walks through it step by step. Protection during your lifetime gets its own treatment in Protecting What’s Yours (While You’re Alive).

If it’s been more than a year since you looked at your estate plan, that’s a reasonable starting point for a conversation. We’re happy to coordinate with your estate planning attorney to make sure what’s on paper still matches what you want for your family today.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

May 5, 2026May 14, 2026

If it feels like the headlines have been relentless lately, that's because they have been. Over the past year, investors have had to process an ongoing trade war, sharp market swings and now the geopolitical shock of a war in Iran—all while trying to stay focused on their long-term financial goals. As we discussed in our Q1 2026 quarterly letter, economic news in the first quarter was dominated by the conflict in the Middle East and its effects on markets.

These are the kinds of disruptive forces that test our patience as investors. And while the current backdrop may feel uniquely unsettling, it's worth stepping back and asking: how does this moment compare to other periods of disruption? And more importantly, how should you respond?

Disruption itself is not new. It could come from government policy like tariffs, from geopolitical crises, from unexpected shocks like the Covid pandemic, or even from something as improbable as one of the world's biggest container ships blocking the Suez Canal for a week. History can give us a clue as to how events like these have shaken out—though, as the SEC likes to remind us, past performance is not indicative of future results. There's no way to know what will happen six days, six months or even six years after a disruptive event takes place.

What History Can Teach Us

Let's start with tariffs, since they've been a persistent feature of the economic landscape since early 2025. When the Trump Administration announced sweeping tariffs on Canada, Mexico and China—with rates ranging from 20% to 25% and climbing higher in subsequent rounds—markets reacted sharply. A series of stutter steps followed as the Administration alternately paused tariffs on some goods while increasing them on others.

History offers useful context. The Smoot-Hawley Tariff Act of 1930 is the most cautionary example: enacted during the Great Depression, it triggered retaliatory tariffs from Canada and European countries, contributed to a collapse in global trade and deepened the economic downturn. The first Trump Administration's 2018 tariffs told a different story—they didn't spark the same cascade, though they also didn't achieve their stated goal of reducing the trade deficit with Mexico, which actually increased by 159%.

As for the 2025 tariff round—we now have the benefit of hindsight. Markets absorbed the initial shock, experienced significant volatility and, true to form, began recovering as investors recalibrated. This is consistent with what more than a century of market history has shown: disruptions are painful in the short term, but markets have generally found their footing.

That said, it's worth being honest about what "long term" really means. The NASDAQ didn't reclaim its dot-com-era peak until 2015—15 years after the bubble burst. The S&P 500 delivered a negative annualized return for the entire decade from 2000 to 2009, underperforming both bonds and cash over that stretch. The long-term direction of markets has been upward—but the path can be grueling, and it can test even the most patient investors. This is precisely why a properly diversified portfolio matters as much as it does.

The same perspective applies to the Iran conflict that has dominated headlines in 2026. As we explored in When Geopolitics Rattle the Markets, geopolitical crises are unsettling by nature and their market effects can be sharp in the short term. But looking back at major geopolitical events over the past century—World War II, the Korean War, the Gulf Wars, the September 11 attacks—markets have ultimately found their footing, even when the recovery took longer than anyone expected.

Your Next Steps

None of this is to say that disruptions won't touch your daily life—they may. Rising prices from tariffs, energy market volatility from geopolitical conflict, uncertainty about future policy—these are real concerns that may warrant a closer look at your budget and spending, particularly if you're on a fixed income.

When it comes to your investment portfolio, though, remember that it's been designed with disruption in mind. Research shows that diversified portfolios—those that combine stocks, bonds and other asset classes—have historically experienced significantly less pain during downturns than all-equity portfolios, and have recovered more quickly as a result. Proper diversification and disciplined rebalancing are built to help you navigate uncertainty without having to make reactive decisions in the heat of the moment.

We've worked together to create an investment plan that's structured for tax efficiency and allocates your assets according to your need, willingness and ability to take on risk. If your goals or circumstances have changed, we can revisit your allocations. But if nothing fundamental has shifted, you may not need to make any changes to your strategy at all.

The noise can feel deafening right now. That's normal—and expected. Disruptions are, by nature, jarring. So if you have questions about what's happening in the markets, the economy or your own portfolio, please reach out. That's exactly what we're here for.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

April 21, 2026May 14, 2026

It has never been more tempting to spend money. Every day, we’re pressured to buy something, whether through traditional ads, targeted recommendations or the curated lifestyles of online influencers. The messages are constant and persuasive.

Financial professionals like us spend a lot of time talking about how to save. But knowing how to spend well is equally important. And for many, spending is surprisingly fraught, wrapped up in behavioral biases and the psychological imprints of past experiences.

Unexamined spending can lead to extremes. On one end of the spectrum, you find overspenders who rack up debt and land in financial hot water. On the other end are those afraid to spend, depriving themselves of things they can afford that would give them pleasure.

Ultimately, spending is unavoidable. Ideally, we find a middle path that allows us to cover necessities and spend on the things that truly bring joy, whether that’s hobbies, travel, experiences with your family and friends, or simple everyday pleasures.

So how do you engage in thoughtful spending? These tips can help.

Consider Your Values

One of the best ways to become a mindful spender is to spend in line with your values. Take the time to identify what matters most to you. These could be things like health, family, community, security or creativity. Before making a purchase, consider whether it supports one or more of these values. Doing so can help you avoid potential behavioral traps, such as signaling—spending money to shape how other people think of us.

It’s one thing to buy a nicer car because you need it. It’s another to buy one because you want to broadcast status to neighbors.

If you can truly afford to do this, there’s not necessarily a lot of harm done financially speaking. But it’s still worth asking whether the motivation reflects something you truly value or simply a desire to impress others.

And if the purchase stretches your finances, the irony is clear: Spending to appear wealthy actually undermines your financial security.

Compare and Despair

Closely related to signaling is the phenomenon of keeping up with the proverbial Joneses.

Morgan Housel, partner at The Collaborative Fund and author of The Psychology of Money puts it well: “There are two ways to use money. One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others. Many people aspire for the former but get caught up chasing the latter.”

When we see other people spending freely—neighbors renovating their kitchen or friends taking pricey vacations—it can create subtle pressure to match their choices. After all, we humans are deeply wired to avoid appearing like outsiders.

But appearances can be misleading. The people you’re comparing yourself to may be financing those purchases or stretching their budget to maintain a perfect front.

So again, before trying to match anyone’s spending, revisit your own priorities. You may find that the security of living within your means is much more important to you.

Be Mindful of Hedonic Adaptation

Besides being a bit of a mouthful, hedonic adaptation is the tendency for humans to return to a baseline level of happiness even after major positive or negative changes in their lives. In other words, the emotional impact of these events fades quickly over time.

This can have important implications for spending. Many purchases—the latest smartphone, a luxury car, a bigger home—promise lasting happiness. These items might provide a short-term boost in satisfaction, but that feeling typically fades faster than we’d expect.

Understanding this tendency can encourage a bit of pause before making big purchases. If it’s greater happiness you seek, whatever you’re considering buying likely isn’t the solution.

Being mindful of hedonic adaptation can also help guard against lifestyle creep, where spending gradually increases as income rises without necessarily improving long-term happiness. Buying that bigger home requires spending more on things like taxes and upkeep, which may quickly make you feel out of control. Or as Housel puts it: “Sometimes the stuff you spend money on has so much influence over your autonomy…that it’s not clear whether you own things or the things own you.”

On a more reassuring note, just as we adapt to positive changes, we also adapt to setbacks. Difficult events like a job loss or a financial downturn can feel overwhelming in the moment, but emotional recovery tends to be swift.

Think Before You Carpe Diem

Popular aphorisms encourage us to “carpe diem,” “YOLO” or “live for the moment.” And on a fundamental level, that message has merit. Life is unpredictable, and it’s important to enjoy it.

However, the idea also can be used to justify impulsive spending, allowing our present selves to win out over our future selves.

Consider a simple example: Spending $200 on a new pair of boots now may not seem like a major decision. However, if that same amount were invested and allowed to grow for decades, it could be worth thousands of dollars in the future.

This doesn’t mean you should never buy those boots—especially if you can afford them. The key is considering the trade-off and making that decision consciously.

Interestingly, carpe diem—often translated as “seize the day”—may have originally carried a more nuanced meaning. Some scholars suggest it would be better translated as “pluck the day,” an allusion to picking fruit or flowers at harvest time. Seen this way, the phrase originally may be more about appreciation and enjoying opportunities when the moment is right, rather than an exhortation to take impulsive action. That, perhaps, is a useful way to think about spending as well.

A Plan That Makes Room for Living

It might be easy to think that financial advice is all about pushing you to cut back and save more. In reality, it’s about finding balance. Together, we can build spending strategies that reflect what matters to you most, so you can feel confident about your future without putting your present happiness on hold.

At TAGStone, our planning conversations aren't just about accumulating wealth, they're about deploying it in ways that reflect what matters most to you. If you'd like to talk through how your spending fits into your broader financial picture, we'd welcome that conversation.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

April 14, 2026May 14, 2026

Published April 14, 2026

At a Glance

Consolidation simplifies your financial life and can trim duplicate fees — but a few 401(k) features (the Rule of 55, plan loans, some institutional share classes) disappear the moment you roll those dollars into an IRA.
There is no universal right answer. The best path depends on your age, your retirement timing, and what each of your existing accounts actually offers.
For most clients, the real payoff isn’t simplicity — it’s getting every retirement dollar aligned to one coherent investment strategy, instead of scattered across five versions of whatever seemed like a good idea in 2014.

If tax season left you digging through 1099s from three old employers, two IRAs, and an account you inherited from a parent, you’re in good company. Some version of this question hits my inbox almost every April: “I’ve got retirement money in six different places. Do I need to pull it all together?”

It’s a fair thing to wonder. After a career of job changes, firm mergers, plan rollovers you meant to finish but didn’t, and a Roth IRA you opened in your thirties, a lot of successful savers look up in their fifties and realize they’re managing more accounts than they intended. The Bureau of Labor Statistics reports that the youngest baby boomers had held an average of 12.9 jobs by age 58. If even half of those came with a workplace retirement plan, you can see how the pile grows.

So: should you consolidate? As with most decisions in planning, the honest answer is it depends — but the factors that matter are knowable, and worth walking through.

The Case for Pulling Things Together

The most obvious benefit of consolidation is simple and not to be underestimated: fewer moving parts. Fewer statements to open. Fewer usernames to remember. Fewer beneficiary forms to update when life changes. When your retirement picture lives in one or two places instead of six, we can actually see it — and so can you.

Cost is the next layer. Multiple legacy accounts often mean multiple sets of administrative, custodial, or advisory fees, quietly compounding against you. Consolidating into a single custodian frequently eliminates that redundancy. It also expands your investment menu. Many old 401(k) plans offer a handful of pre-selected funds; an IRA opens the door to nearly any publicly traded security.

Consolidation also gets easier to appreciate as you approach required minimum distribution age. Calculating and executing one RMD, from one custodian, is meaningfully less error-prone than coordinating three. And on the estate side, fewer accounts across fewer institutions makes life dramatically simpler for whoever has to settle your affairs one day — which is a gift to them, even if it doesn’t feel like one to you today.

What You Might Quietly Give Up

This is where I slow people down. Consolidation isn’t always the right call, and a few specific features can vanish the moment funds leave an old 401(k):

The Rule of 55. If you separate from your employer in or after the year you turn 55, you can take penalty-free distributions from that 401(k) before age 59½. Roll those dollars into an IRA and the exception is gone. For anyone considering early retirement, this is a detail worth protecting.

Plan loans. A 401(k) can be borrowed against in a pinch; an IRA cannot. I’d never recommend borrowing from retirement savings as a first move, but if a current plan has loan provisions you value as a last-resort emergency tool, be thoughtful before rolling that flexibility away.

Institutional share classes. Some large employer plans give participants access to low-cost institutional share classes — share classes you often can’t buy individually, even with a sizable IRA balance. If your old plan’s expense ratios are genuinely lower than what we can replicate elsewhere, staying put can be the right answer.

Before we consolidate anything, I want to compare the expense ratios and fund menus in every account you’re considering moving. Sometimes the old plan is quietly the cheapest and best option you have.

Three Ways to Simplify (Without Doing Too Much)

If consolidation makes sense, you generally have three paths:

Roll everything into an IRA. This tends to offer the broadest investment flexibility and the cleanest administrative picture, and it’s the right move for most people.

Roll into your current employer’s 401(k). If your current plan accepts incoming rollovers and offers strong, low-cost investment options, this preserves 401(k)-specific features (Rule of 55, plan loans) while still reducing the account count.

Same custodian, separate accounts. A middle path: move everything to one institution without commingling account types. You still get one login, one statement, one phone call — but your traditional IRA, Roth IRA, inherited IRA, and rollover IRA each stay in their own lane. This matters more than it sounds; for example, commingling an inherited IRA with a contributory IRA can create tracking and distribution headaches you don’t want.

The Bottom Line

The goal isn’t to own the fewest retirement accounts. The goal is to make sure every retirement dollar you’ve worked for is being managed deliberately — aligned to a single long-term strategy rather than whatever each plan’s default allocation happened to be the year you left that job.

For some clients, that means five separate accounts collapsing into one. For others, it means keeping a legacy 401(k) in place for its unique features while consolidating the rest. The right answer is the one that fits your circumstances — your age, your retirement timeline, your estate plan, and what each of your current accounts actually offers.

If you’ve been meaning to take inventory, this is a good time to do it. Pull your most recent statements together and send them over. A forty-five minute conversation is usually enough to tell whether consolidating is worth your effort, or whether you’re better off leaving things as they are.

This post is part of our Client Questions series. See also: Lump Sum vs. Dollar-Cost Averaging.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

March 24, 2026May 14, 2026

What do you do if you’ve just received a big bonus at work, inherited some money, sold a business, or otherwise enjoyed a recent windfall you’d like to invest? Should you invest the money right away—even if the market seems particularly high or low—or little by little over time?

This is a question we often hear from clients and other investors. No wonder: Deciding how to invest a pot of money can indeed feel paralyzing. What if you put the money in, and the market promptly tanks? Or what if you hesitate, and the market soars? It’s perfectly normal to worry that you’ll make the wrong move…or at least not the best one.

Investing a lump sum all at once or over time each has its advantages and disadvantages. Let’s take a look at some of the factors to consider.

Begin with Your Goals

Before making any investment moves, first consider what you want to use your money for.

In the short term, the market can be a volatile place, with the potential for big ups and downs. If some or all of your money is going to be used for short-term goals—say, paying college tuition bills that are just a few years away—you may consider more conservative investments less affected by this volatility, like short-term bonds, bond funds, or certificates of deposit (CDs).

If you want that money to help you pursue long-term goals such as retirement, then investing in the stock market right away is likely worthwhile. Over the long term, volatility tends to smooth out, and the markets have historically continued to move higher.

Compare Lump-Sum Investing vs. Dollar-Cost Averaging

When you invest a lump sum, all your money is exposed to the market right away. If the market is on an upward tack, you can take advantage of immediate gains.

But of course, near-term market returns are not predictable. There could be a downturn after you invest your lump sum. If this potential for a setback bothers you, dollar-cost averaging—investing a set amount of money at regular intervals—may be a more comfortable strategy.

For example, you could use dollar-cost averaging to invest $1,000,000 in a low-cost, total market index fund in $200,000 monthly installments over five months. That way, when the market is at a high, your investment buys fewer fund shares. And when the market is lower, your investment buys more shares. The strategy helps you take advantage of the market’s natural ups and downs and manage the average cost of the shares you buy.

However, be aware that the greater comfort of pacing your investments through dollar-cost averaging may come at a price. Research shows that lump-sum investing outperforms dollar-cost averaging 68% of the time.

That said, keep this in perspective: how you deploy new money is unlikely to matter nearly as much as whether you are investing efficiently to begin with — starting with a plan that reflects your goals and risk tolerance, investing in a diversified mix of low-cost funds, and staying the course through inevitable market swings. The best deployment strategy is simply the one that helps you adhere to those principles.

So, ask yourself: Is maximizing expected returns your top priority? If so, the lump-sum approach might make the most sense for you. On the other hand, the same research suggests the expected outperformance is not by a large margin. If the specter of potential investment losses keeps you awake at night, it may be worth taking a small hit to use dollar-cost averaging, especially if it reduces the risk of panic-induced selling that can lock in even greater losses.

Whatever You Do, Don’t Delay

Historically, stocks and bonds outperform cash holdings over the long term. It’s critical to start investing as soon as possible to take advantage of this outperformance.

Delaying putting cash in the market is a form of market timing, buying or selling shares in an attempt to predict future market movements. This is a complicated game you’re unlikely to win. Consider that average equity fund investor returns trailed the market (as proxied by the S&P 500) by 5.5% in 2023, largely due to trying to time the market. Both lump-sum investing and dollar-cost averaging help you avoid this behavior and take advantage of the tendency for the market to grow over the long term. And this is what you need to meet your long-term financial goals. The important thing is to choose the strategy that will allow you to stick to your long-term plan.

Unsure how to invest some of your cash holdings? Reach out. We’d be happy to discuss which option best suits your needs.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

March 3, 2026May 14, 2026

On December 31, 2025, legendary investor Warren Buffett retired as CEO of Berkshire Hathaway at age 95. Berkshire Hathaway compounded shareholder capital at approximately 20% annually for over six decades—one of the most remarkable investment records ever achieved. Buffett’s retirement marks the end of one of the greatest investing careers. Yet, the principles that guided him remain just as relevant today for families aiming to grow and preserve wealth across generations.

Sixty years ago, Buffett took over Berkshire Hathaway, a struggling New England textile company, and turned it into a powerhouse that operates everything from insurance firms to household names like Duracell batteries. Along the way, he earned the nickname “Oracle of Omaha” for carefully selecting undervalued companies and holding onto them for the long term—a strategy that has worked well for him. Today, he is the sixth richest person in the world, with a net worth around $154 billion.

Throughout his career, Buffett has shared some of his success secrets, often through his well-known—and often humorous—shareholder letters. Below are some of our favorite insights that continue to guide investors of all kinds.

Navigating Fear and Greed

Investing is carried out by people, and people are emotional. As a result, human behavior heavily influences market movements. Fear and greed can cause investors to jump in and out of the market en masse, often to their own detriment.

Buffett illustrated this idea well when he wrote:

“Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community…We never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Buffett warns us to be cautious when investors are “greedy,” as this can push prices to levels that are not sustainable—sometimes leading to a crash.

Conversely, when investors are fearful, they might miss out on significant opportunities to buy bargains during a market downturn.

The key to successful investing is managing emotional impulses. Buffett has said: “The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

This is one of the reasons we build portfolios that can weather market volatility before it happens, rather than reacting emotionally once it does.

Bursting Bubbles

During market bubbles—such as the Dot Com bubble of the late 1990s or the housing boom leading up to the 2008 crash—prices rise rapidly beyond their true value, fueled by speculation and hype.

Even investors who were initially skeptical may give in to the temptation to join in, entering the market when prices are excessively inflated and due for a crash.

Buffett summarizes this well when he said:

“Bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: ‘What the wise man does in the beginning, the fool does in the end.’”

Buffett has also said, “It’s only when the tide goes out that you learn who’s been swimming naked.” Indeed, when a booming market turns south, you don’t want to be the one who has taken on too much risk and ends up scrambling to get out.

Playing the Long Game

You’ve probably heard us say that investing is a long-term venture. This is also one of Buffett’s core principles: “Our favorite holding period is forever.” He has additionally stated, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

The evidence is clear: over the long term, the stock market has traditionally moved higher. For families building multi-generational wealth, committing to long-term holding periods is the best way to navigate the inevitable short-term market fluctuations that accompany the overall upward trend.

Starting Early

Unsurprisingly, there's a lot of overlap between aphorisms about planting trees and investing. Both require planning and an early start to ensure you reap their benefits.

As Buffett once said:

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Similarly, a well-crafted investment plan needs attention and nurturing, supported by disciplined approaches like dollar-cost averaging—the practice of regularly investing a fixed amount regardless of market conditions—and periodic rebalancing. But mostly, wealth and trees simply need time to grow.

In this sense, Buffett’s “secrets” of success have never truly been secrets. They are just simple truths that all investors can follow: stay calm when others panic, resist the hype, invest regularly, and think long term. Even with these principles, it’s not always easy to stay the course—especially when markets become turbulent.

These principles continue to guide how we think about managing wealth for the families we serve. Please reach out when you have questions about the markets and how they affect your long-term plan.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

December 23, 2025May 14, 2026

At a Glance

The greatest investment risk for affluent investors is often behavioral, not financial — emotional reactions, overconfidence, and narrative-driven decisions can quietly erode long-term outcomes.
Improving decision quality matters more as wealth grows — avoiding large, irreversible mistakes is far more impactful than trying to optimize short-term returns.
Disciplined frameworks and outside perspective help protect long-term plans — especially during periods of volatility, transition, or heightened uncertainty.

As the old year draws to a close and a new one begins, millions of Americans will once again make New Year’s resolutions. For many, these resolutions focus on health or wealth, and when it comes to financial resolutions, the usual suspects tend to surface: spend less, save more, and pay down debt.

For affluent investors and families, however, financial outcomes are rarely limited by access to capital. Instead, the greatest risk often comes from behavioral missteps made during periods of uncertainty, transition, or emotional intensity—when the consequences of a single decision can compound over years or even decades.

These traditional resolutions are, of course, worthwhile. But this year, consider adding another set of commitments that go beyond budgeting and focus on the behavioral tendencies that shape—and sometimes sabotage—financial decision‑making. The following behavioral finance resolutions are designed to help you make sound, deliberate financial choices in the year ahead.

Dial Down Your Emotions

Emotions often move faster than logic. They can override rational thinking and push investors toward decisions that may feel reassuring in the moment but undermine long‑term financial health. This year, resolve to take emotion out of investing as much as possible.

In our work with high‑net‑worth families, we most often see emotional decision‑making surface during market drawdowns, liquidity events, or periods of concentrated exposure—when the dollar impact of reacting impulsively can be material.

Separating feelings from financial choices can help sidestep several potentially damaging behavioral biases, including loss aversion. Loss aversion is the tendency to fear losses more than we value gains. It can lead to panic selling during volatile markets, locking in losses, and missing subsequent recoveries. Conversely, it may cause investors to hold onto losing positions far too long, unwilling to realize losses even when doing so would be financially prudent.

At higher levels of wealth, these decisions are rarely about timing the market perfectly. They are about avoiding large, irreversible allocation errors at precisely the wrong moment.

Emotional investing can also fuel home bias—the instinct to stick with what feels familiar. This might mean favoring a particular company, industry, or even domestic markets at the expense of broader diversification. Instead, it helps to view investments not as reflections of personal preference or identity, but simply as tools designed to support long‑term objectives.

Get a Second Opinion

From time to time, even disciplined investors may feel tempted to alter a long‑term financial plan. Before acting, it often pays to seek a second opinion. Thoughtful counsel can help rein in two common behavioral biases: overconfidence and confirmation bias.

This tendency is especially common among successful professionals and business owners who are accustomed to making confident decisions in their operating lives and may unintentionally carry that same decisiveness into complex investment choices.

Overconfidence bias reflects the belief that one can predict outcomes with greater accuracy than is realistically possible. Left unchecked, it may lead to behaviors such as market timing or taking oversized positions in perceived “can’t‑miss” opportunities.

Confirmation bias, meanwhile, is the tendency to seek out information that supports existing beliefs while discounting evidence to the contrary. This can create an echo chamber, making it difficult to objectively assess whether an investment decision is truly sound.

A thoughtful second opinion is less about outsourcing judgment and more about improving decision quality by introducing disciplined friction before capital is reallocated. Seeking outside perspective helps pressure‑test ideas, surface overlooked assumptions, and move forward with greater clarity.

Keep an Open Mind

Financial markets evolve constantly. Rigid thinking increases the risk of missing emerging opportunities or holding onto investments that no longer serve a portfolio’s goals.

We often encounter this dynamic after long periods of market leadership by a particular asset class, strategy, or geography—when familiarity begins to masquerade as prudence.

Maintaining an open mind allows investors to reevaluate long‑held assumptions and adapt as new information emerges. This helps counter status quo bias, the impulse to stick with the current situation simply because it is familiar. It also mitigates anchoring—the tendency to rely too heavily on the first piece of information encountered. For example, investors may anchor to the original purchase price of a stock and use it as a reference point for future decisions, rather than focusing on more relevant fundamentals.

As portfolios grow more complex, flexibility becomes an asset in its own right.

Look at Things From Different Angles

How information is presented can dramatically influence how it is interpreted. The same facts may feel very different depending on framing, a reality well understood by marketers, pundits, and headline writers seeking attention.

Before accepting any narrative as true—particularly in finance—it is worth examining the issue from multiple angles. Seeking out contrarian viewpoints, reframing the story, and asking what the opposite case might look like can all be valuable exercises.

This approach helps guard against framing bias, where decisions are influenced more by presentation than by substance. For instance, a fund described as having a “5% chance of loss” may feel riskier than one described as having a “95% chance of success,” even though both statements convey the same probability.

For investors managing significant wealth, reframing decisions in probabilistic terms rather than narrative ones can materially reduce emotional influence and support greater long‑term consistency.

Stepping back, asking questions, and challenging initial interpretations often leads to more balanced and resilient decision‑making.

Start a Media Diet

Today’s information ecosystem is noisy, fragmented, and optimized to capture attention. Headlines are designed to provoke emotion, while social media algorithms tend to amplify the most sensational viewpoints.

For affluent investors, persistent exposure to market narratives can encourage unnecessary portfolio activity—even when a well‑constructed long‑term plan is already in place.

A deliberate media diet can help restore balance. This does not require complete disengagement, but it may involve limiting exposure to unvetted commentary and prioritizing sources with strong editorial standards. A healthy media diet also means resisting the urge to check markets constantly; long‑term strategies do not require play‑by‑play updates.

A more intentional media environment helps curb availability bias, where highly publicized events distort perceptions of risk. It also mitigates recency bias, which leads investors to overweight recent market movements. By reducing exposure to trending narratives, it further limits the pull of herding—the impulse to follow the crowd.

Reducing noise is not about disengaging from markets; it is about preserving decision‑making bandwidth for moments that truly matter.

Why Behavioral Discipline Matters More as Wealth Grows

As wealth increases, financial complexity tends to rise alongside it. Additional assets, entities, and stakeholders introduce more variables—and more emotionally charged decisions. In this environment, behavioral discipline becomes increasingly central to long‑term success. The cost of small mistakes grows, while the marginal benefit of impulsive action declines.

Many of the most impactful financial decisions are not urgent, but they are consequential. Having a clear framework—and a thoughtful sounding board—can help ensure those decisions are made deliberately rather than reactively.

If you ever have questions or would like to talk through how these principles apply to your own situation, we would be happy to have a conversation.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

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