When people talk of investing success, it’s often around some new stock picking method, or that one time they got extremely lucky and were the exception, not the rule. In a rising market like we’ve had for the last several years, there are many people who feel like successful stock pickers. There are many people who feel like they’ve gotten lucky – repeatedly. That’s because a rising tide lifts all boats.

True long-term investment success comes from a lot more than stock picking methods or luck. But no one likes to admit that – talking about discipline and smart investor savvy doesn’t always make for the best “look at me” story to tell your friends. That’s why you have to decide what’s more important to you, long-term success and a secure future, or a good story about “that one time…..”

Having sound principles to guide your investment decisions and strategy choice are one of the best ways to ensure your ability to reach your full financial potential.

Here are some of the investing principles we abide by, and educate our clients on:

1. Markets are in a drawdown more often than not. Yes, they market may be down 3% today, but that’s normal. Don’t be alarmed, but also, be prepared that you may see red once in a while. That’s why you should have an investment strategy that is designed to “miss” the worst days, and cushion the blow to your money.

2. A rules-based, disciplined approach is the best way to ensure long-term success. You should fully understand how and why you’re invested the way you are. An Investment Policy Statement is one of the best ways to do this. If your investments don’t align with your IPS, you shouldn’t invest in it. Period.

Related: The Best Way to Guide Your Investment Decisions

3. Volatility eats your returns. Not risk. Risk doesn’t drive your returns, it just affects your probability of losing money. Volatility directly affects your returns, and wild fluctuations can quickly erode your wealth. This is where diversification isn’t enough – it only mitigates risk. You must have a strategy in place that mitigates volatility as well.

Related: Volatility Gremlins are Killing Your Bottom Line

4. Buy and hold is easier said than done. “Set it and forget it’ is the mantra of many investment firms. This isn’t necessarily bad advice. Over the long-term, the market has produced a compounded return around 7%. However, the real return fluctuates between up 40% and down 60%. Most people can’t hold on during those drawdowns, and wind up selling at the wrong time.

5. It’s better to miss the worst days and the best days in the market. Buy and hold advisors say you must capture the 10 best days in the market, as that is what drives your overall return. And they are right. But, if you miss both the best and worst days, (by using a trend following/momentum strategy, for example) your return could be even better. Historically, research shows that the best days come during the worst bear markets, so we’d prefer not to participate in the full bear periods.

6. Markets are not always efficient. Markets rarely act the way text books say they should. Investors can and do act irrationally. Human behavior can and does move markets, and can cause prices to remain too high or too low for long periods of time. This is why momentum exists. Your strategy must be capable of capitalizing on these market realities.

7. Consistent returns are more beneficial than big pops here and there. Consistent returns, even if they’re lower, will increase your dollar growth over the long-term because it means you’re offsetting volatility. This makes for a much smoother, less emotional investment ride. In turn, it can prevent you from making bad decisions with your money. This is a result of a strategy that controls volatility.

Related: 4 Reasons Why Market Timing Fails as a Money Maker

8. Look at the downside first, not the upside. Every smart investor knows it’s not about your chance of success – it’s about your chance of failure. And remember, failure is not an option. Therefore, your strategy must minimize downside risk.

9. Investing costs matter. These can erode your returns as much as volatility. Your strategy should work to lower the cost of expense ratios and be tax efficient. Remember that a good advisor can be worth a reasonable fee. Just be sure they’re providing you with value-based solutions, not selling you products.

Why Does it Matter to You?

The principles listed here don’t encompass every good investing principle out there. But, if you act based on these principles, you’ll find that you’ve built a strong foundation for long-term investing success. Remember, this is your life. You get one shot, so make sure you do everything you can to make it successful, and succeed in living the life YOU want.

Our strategies are built based on these principles.

Want to see how you can minimize downside risk, mitigate volatility, increase consistent returns, and protect your bottom line? Click below.

Guys, here’s one thing you may want to rely on your wife for – investing advice. That’s right, the evidence has been mounting, and the conclusions are clear – women are better investors than men.

Surprised? You’re not alone. Even most women themselves believe they are far less superior than men when it comes to investing. There are plenty of studies to show that. But when you examine the actual performance results, women’s portfolios regularly outperform men’s.

Recently, one firm wanted to bring this knowledge to the forefront. State Street Global Advisors put up a statue of a girl facing off with the Wall Street bull. The media dubbed her as “the fearless girl.” It got a lot of attention, this girl making such a bold statement on a street where it’s considered a man’s world.

Executives from the company commented to multiple news outlets that they strategically placed the statue there on International Women’s Day, to kickstart the conversation of women and investing. In particular, the fact that women are indeed better investors than men.

Boys Will Be Boys – A Good Thing When Investing?

Terrance Odean and Brad Barber, professors at Berkley’s Haas School of Business, are some of the most prominent researchers on the gender gap in investing. Based on their research in the 90s, they found that men traded 45% more than women. This research led to their paper Boys Will Be Boys, which has been published in dozens of scholarly journals.

Actively trying to time the market commonly leads to lower returns. Odean and Barber site this as the biggest cause of the widening gender performance gap. Men’s active trading during their research period caused them to have average returns that were a full percentage point lower than women.

In comparison, they found that women tend to be better at behaving in ways that lead to long-term investing success. This means adhering to some of the golden rules of investing, such as staying in the market, weathering market fluctuations without making drastic changes, not taking unnecessary risk, and sticking to the strategy that best aligns with their goals.

Essentially, women tend to be “buy and hold” investors, heeding the advice of experts like Buffett and Bogle. They’re much better at investing than they give themselves credit for.

The Results Are In

According to research from Fidelity, women outperformed men by 0.4% in 2016. That may not seem like much, but it can add up over time. Especially given the fact that the study found women have outperformed men for the last decade. Women also saved 9% of their paychecks, compared to an average of 8.6% saved by men.

That’s how women can end up with a lot more money than men overtime.

Betterment PhD research scientist, Sam Swift, also built a similar case. In a recent study, Swift went back through 60,000 investment accounts from January 1, 2012 through January 6, 2016, and examined the account holder’s activity. Here are three key findings from the study:

1. Women logged into their account 45% less frequently than men. Less logins mean a decreased chance of seeing your portfolio when it’s down, which can lead you to make a bad decision.

2. Women take less risk than men. They had a tendency to stick with their recommended allocation model, while men deviated from the advice, usually taking more risk than suggested.

3. Women tend to be much better at staying disciplined during market fluctuations. They changed their allocation 20% less frequently.

Yet, despite the volumes that this evidence speaks, another study from Fidelity found that 8 in 10 women hold back from talking about their finances and investing, simply because they lack the confidence to do so. The majority also don’t think they’re smart enough to talk to a professional advisor on their own, and believe that they are grossly underprepared for retirement.

How can this be what women truly think, when they’re in fact the investing alpha? Welcome to the conundrum of conundrums in finance.

The Psychology Behind It All

On the surface, this evidence simply highlights the difference in performance between male and female investors. But when you dig deeper, it gives you a unique look into the psychological make-up of men and women.

Odean and Barber’s research led to an important finding – men tend to be inherently overconfident, and it shows up in their investing behavior.

This is what they believed led to men’s active trading, and in turn received most of the blame for their poor performance. Overconfidence bias has been most commonly linked to the bad behaviors of marketing timing and stock picking, which can wreak havoc on your portfolio, no matter your gender.

Conversely, the female psyche causes women to be inherently risk-averse and goal-oriented.  They are focused on the long-term rather than the short-term, and don’t feel the need to trade in and out.

This lead to better performance for women. However, women’s lack of investing confidence causes many of them to not invest, remain ultra-conservative, and avoid seeking professional help. That’s when their nature becomes destructive.

Perhaps that’s the reason the conundrum still exists – women behave in a way that leads to solid investment performance, but they think in a way that fosters little to no confidence in their abilities.

Why Does It Matter to You?

The point of the studies cited here, and this article, aren’t to dub one gender as the savvier investor. It’s also not to claim that gender is a direct driver of investment success. Rather, it’s to better understand the role psychology plays in investing, and where the strengths of each gender lie.

Each gender could learn something valuable from the other. Case in point, women need to become more confident when it comes to investing and their finances. Not because of gender equality, but because it’s vital common sense given the reality we face today. According to Pew research, 40% of women already out-earn their spouses. Furthermore, nine in 10 women will be the sole financial decision maker in their household at some point in their life.

Men could benefit by humbling themselves to the market and reducing active trading. In addition to Odean and Barber’s findings, DALBAR’s 2016 annual report on investor behavior proves that bad investor behavior is the leading cause of under-performance, and contributes to poor performance over the long-term.

In essence, both men and women would benefit by understanding that a lack of confidence, as well as overconfidence, can hurt your performance.

You get one shot at this financial journey – one. Failure is not an option. So, you need to manage your money in a way where there is a very small possibility of failure. Above all, that means taking a seat at the table. It also means staying disciplined according to your investment policy statement, and implementing an investment strategy that aims to limit downside exposure and mitigate volatility, while still capturing potential. Now, that’s a philosophy that can work no matter what gender you are.

We all know that money plays on emotions, and that emotions drive behavior. And it says a lot about this very fact when the scientist responsible for the law of gravity can be swept up in an investment that for a time, defied the laws of science. Sir Isaac Newton may have been one of the most gifted minds in the scientific community, but in his day to day life, he wasn’t much more than a gullible participant in one of the biggest market bubbles of the early 1700s.

Even Smarties Can be Suckers

No matter how advanced your intellectual capabilities may be, there is a sobering fact that unites investors everywhere: We’re suckers for a good get rich quick strategy. Throughout history, financial bubbles have tugged at the cords of greed, seducing investors with their promises of instant gratification.

The bubble that got Newton was the South Sea Bubble of 1720. It was centered on a company that was promised a trade monopoly by the British government for taking over the debt that was the result of the war against France. The investment grapevines blazed and the press continued to fuel the fire. The South Sea Company shares grew almost eight-fold between January and mid-July 1720. But just as all good things come to an end, the bubble burst in September of that year. By October, share prices had dwindled to their January price.

So what does Newton and other investors from the South Sea Bubble have in common with investing victims of modern day bubbles? Quite a bit according to Richard Dale, a London-based economist, author and historian.

Investing Lessons to be Learned from Market Bubbles

Dale recently gave an interview to MarketWatch where he points out investing lessons from the South Sea bubble that can still apply to the modern investor/market bubble. Here are a few of them:

MarketWatch: How did Isaac Newton get lured into such a disastrous investment?

Dale: Newton invested around £3,500 in early 1720 and sold out in late April of that year having doubled his money. However, like so many others, he was induced to get back into the market in the summer of 1720 at the height of the bubble and ended up losing £20,000, around £3 million in today’s money.

MarketWatch: What modern-day financial bubble is most similar to the South Sea Bubble?

Dale: From the standpoint of the South Sea directors, the bubble represented a giant Ponzi scheme (e.g. Bernie Madoff) in that it proposed to pay dividends not from profits but from sales of new shares for cash. From the point of view of investment behavior, the bubble resembles the dot.com boom/bust when the valuations of dot.com companies lost any connection with underlying value or realistic profit projections. (The Bank for International Settlements pointed this out at the time). I don’t think much has changed. Bubbles are inherently instances of how crowds can go crazy.

It’s exactly the same mentality. ‘You gotta play the game while the game is going on.’ The fear of losing out and losing market share, that mentality of knowingly taking some pretty big risks because everyone else seems to be doing the same, seems to be a feature of markets from time to time.

MarketWatch: So it is pretty easy to get sucked into a bubble?

Dale: I think even way back in 1720, the people that got sucked in, in many cases, were very ordinary people. You didn’t have to be rich. Mini bubbles were developing. It was the poor man’s bubble. For a penny you could buy a share subscription. Everyone was being sucked in at that time…I think one of the features today is one of the ordinary returns from conventional safe investments is now so low that people are inclined to look for riskier alternatives.

MarketWatch: What are signs that an investor is involved in a venture that could end badly?

Dale: There are different things…It’s painful to watch when people are offered higher-than-normal returns, and higher returns than you could reasonably expect. They tend to fall for it time and again. That happens and people lose their money. You only offer supernormal returns if you’re offering supernormal risks.

What we’re seeing all the time with these is that …investors are offered good returns when good returns are hard to come by. That’s not going to change…Madoff was a slightly more sophisticated one because returns were not that out of the ordinary. That kind of thing is just going to go on and on. People are greedy and will jump at the prospects of better-than-normal rates of return.

MarketWatch: What else drives people to get involved in risky financial ventures?

Dale: In some cases, it is the desire to be brave and do something different, the excitement. Or it is a retired person wanting to do something interesting, make their lives rather exciting…high risk, high return. There are plenty of savvy investors who are prepared to take a high risk, but once you get to a certain stage you don’t need to do that. Some people just don’t know they’re taking the risk…a lot of people are very financially naive. It is unfortunate, but that is the case.

Why Does it Matter to You?

At their core, market bubbles from all time periods have the same effect on investors: They convince them they’re onto something groundbreaking only to have it blow up in their face. A good way to avoid being swept up in the market mania is to create an Investment Policy Statement.

This statement will guide how you invest by aligning your money with your values and goal for reaching your full financial potential. If an investment doesn’t match the criteria of your IPS – which many found in market bubbles won’t – then you shouldn’t invest in it. Period.