Let’s start with a few basic things when it comes to investing your wealth.
1. You probably don’t have any stock picking expertise and picking stocks is hard
But it’s not your fault! There was a landmark study by Professor Hendrik Bessembinder (Arizona State University), titled "Do Stocks Outperform Treasury Bills?"
His research, which has been updated as recently as 2025, reveals why it’s so much more effective to buy a market-cap weighted index than to try to pick individual stocks.
The Key Insights
Bessembinder found that just 4% of all publicly listed stocks have been responsible for all of the net wealth creation in the U.S. stock market since 1926.
Since 1926, the majority (51.6%) of common stocks have had negative cumulative returns over their entire lifetimes.
Roughly 58% of stocks fail to even outperform a one-month U.S. Treasury Bill over their lifetime.
So ask yourself: can you identify the 48.4% of common stocks that have positive returns?
2. Your ability to handle drawdowns is less than you think
Everybody is aggressive in a bull market. They think they can handle the inevitable 20%+ drops that happen every couple of years without panic-selling at the bottom.
Maybe.
But that’s mostly because we’ve had a bull market for the past 15+ years where every dip has been aggressively supported by the Fed and we’ve been trained to pile in with all our money the more it drops.
At some point, the market isn’t going to bounce back as quickly, and might I dare say experience another leg down that shatters your confidence in a bright financial future.
3. You have a life to live
Look, picking stocks is fun. These days, for many people, it’s little different from a gambling addiction. A lot of people are looking for the big score that provides a step up in life. It can happen - we see it all the time in the news and on social media. But for every lottery winner there’s millions of people who end up worse off.
In my opinion, for the vast majority of people, you’re better off forgetting about the stock market and using the world’s simplest investment plan.
The World’s Simplest Investment Plan
The world’s simplest investment plan divides your liquid assets into three buckets:
Sleep at Night Fund (Now): Stuff the cash into a money market account to be used in case some emergency pops up. I’m not going to tell you how much you need - I don’t know you.
Big Purchase Fund (next 10 years): if you need the money for a particular thing in less than 10 years (ie, house downpayment, new car, college, etc), use one of the new-fangled bond ETFs that target a specific year for the maturity date of all the bonds in them. Why not be more aggressive with your investments? The simple answer to this question is another question: how painful would it be to pay for the thing you’re saving for twice?
10+ Years: two options here. Either use a lifecycle fund that gets more conservative as you get older or use something like AVMA. AVMA is a globally diversified, "all-in-one" portfolio that uses a systematic, factor-based approach to tilt toward companies with higher expected returns (value and profitability) while maintaining a moderate risk profile. This is what I personally do: all of my retirement accounts are 100% invested in AVMA or a lifecycle fund.
The beauty of The World’s Simplest Investment Plan is that you don’t have to think about it, don’t have to rebalance anything, you just keep dumping money into one of the buckets depending on your goals, needs, and available cash flow.
Congratulations. You don’t need to know anything else about investing. And there is now zero reason to subscribe.
But…
I do have a few thoughts on portfolio construction, investing, and stockpicking if you’re interested. This is simply a notebook of how I handle my main investment portfolio, how I’m thinking about the world, and how that intersects with opportunities.
The best use of Dstressed is occasional investing ideas. Subscribe if you want the ideas; stay if you’re willing to do the work to build your own conviction.