Your Investments: Sticking to a carefully constructed plan in volatile markets

Heroic passengers, including a plumber from Ness Tziona, a dentist, an owner of an insurance agency, and a finance executive, rushed to the cockpit, helped subdue the attacker, assisted the wounded captain, and helped stabilize the plane after a dangerous descent. Two off-duty pilots who were on the flight took over and landed the plane.

For the passengers, it was nothing short of miraculous. So many things had to go right at precisely the right moment. The captain had to remain capable of acting, passengers had to find the courage to intervene, and two pilots just happened to be sitting among the passengers. Sometimes the difference between disaster and survival comes down to a handful of things going right.

There is a similar lesson in investing. Investors are constantly being tempted to “catch” more. The next hot stock. The next cryptocurrency. The next artificial-intelligence winner. The next market rally.

The next big trade. There is always something else to chase. But investing isn’t about catching everything. It is about catching what matters. A portfolio isn’t a collection of hot ideas. It’s about creating purposeful diversification.

A portfolio should be built around a clear objective and time horizon. If you are investing for retirement 20 years from now, your portfolio may look very different from someone who needs the money in two years. Once that framework is established, you can determine how much to allocate to stocks, bonds, cash, and other investments, and how broadly to diversify within them.

The mistake is thinking that every new opportunity belongs in the portfolio. An investor sees an AI stock climbing, a commodity taking off, a new cryptocurrency making headlines, and a particular market outperforming, and feels compelled to own all of them. Before long, the portfolio can become a collection of ideas rather than a coherent investment plan. What you end up with is a hodgepodge of yesterday’s trendiest picks.

This is where “If you grasp too much, you have grasped nothing; if you grasp a little, you have grasped it,” comes into play. You don’t need to capture every winning investment. You need a portfolio designed to participate in long-term economic growth while keeping risk at a level you can live with. In other words, don’t measure your success by how many opportunities you caught. Measure it by whether your portfolio is doing what you built it to do.

That shift in thinking can be liberating. If a stock doubles and you don’t own it, you haven’t necessarily made a mistake. If a particular sector surges and you have only limited exposure to it, that doesn’t automatically mean your portfolio is deficient. The market will always produce winners you don’t own. The danger comes when the fear of missing out causes you to abandon a carefully constructed strategy and continually chase whatever has recently performed well.

A diversified portfolio is, by definition, going to miss some of the big winners. That’s the price of not having to know in advance which companies or sectors will be those winners.

If you own a broad portfolio and technology shoots higher, you will have exposure to tech but not own every big winner. If energy surges, you may have some exposure to energy without having predicted which oil company would perform best. If emerging markets outperform, you may participate without having made a concentrated bet on a particular country.

Focus on what you can control. There is another lesson from the flydubai incident that applies to investing. The passengers couldn’t control what had happened. They couldn’t control the aircraft’s mechanical systems or the circumstances that had developed in the cockpit. But when the crisis occurred, they focused on what they could do.

Investors face a very different type of uncertainty, but the principle is similar. You can’t control the Federal Reserve. You can’t control geopolitical events. You can’t control next quarter’s earnings. You can’t control whether the market rises or falls tomorrow. You can control how much you save and spend. You can control your asset allocation.

The passengers on the flydubai flight were extraordinarily fortunate that, at a moment of crisis, the right people were in the right place and the right things happened.

Investors can’t count on that. They need something different: a sensible plan, appropriate diversification and the discipline to stick with it.