What’s gut got to do with it?

I’ve recently read a best-selling book called Gut, by Guilia Enders. I was fascinated to learn that our moods are determined by our gut flora and the food we eat.

Towards the end of the book, the author says that following 24-hour news results in depression and stress. She recommends you turn it off. But, if you do watch it, to remember that much of it is outside your control.

Although she’s tackling a completely different subject, the lifestyle advice she deals out is exactly the same as mine. This article digs deeper. I hope you find it useful.

Summarised from the Gut book

Those who brood over their problems will find that our modern world offers a rich palette of problems to ponder. These are often problems we can do nothing about. Brooding over problems that cannot be changed results in stress. It becomes increasingly difficult for us to see beyond our problems.

Studies have repeatedly found that the least favourable reaction is fretful brooding – about who might be to blame for our woes, for example.

A stressed nervous system is like a taut bowstring – in a constant state of alertness and sensitive to any external stimulus. As a permanent lifestyle, such a state is pretty costly.

Trust the markets

You’ll be less stressed if you ignore the media panic when the markets drop.

If you wait long enough, they will go up again.

As evidence of this, see the ‘patchwork quilt’ graph below from Vanguard. It shows the performance of different asset classes over the past decade.

Pick a colour, and follow it up and down over the years. This shows you can’t pick any one single asset class and expect it to perform consistently. You have to diversify and spread the risk.

What the experts say

David Booth, co-founder of Dimensional*, alerted me to an article he wrote in The Business Times. I quote (with added spacing and highlights):

The right approach is to, first, make sure you have an investment philosophy that is sensible and based on sound principles. Second, make sure your plan is realistic and matches where you are in life.

Even the greatest plan is no good if you can’t stick to it through tough times.

[The plan] should be consistent with long-term stock and bond market returns. You can trust the market, without merely tracking it, and you can do better than the market without trying to outguess it.

People who get distracted by the daily noise of the markets end up paying too much in fees and trading costs.

*Dimensional is a global asset management firm founded in 1981 that manages more than US $500 billion globally.

In summary

Reacting to the media hype costs you both in stress and money.

Plan 100 clients are therefore urged to follow the same ethos as recommended by Dimensional and in the Gut book:

  • Ignore what you can’t control
  • Look at what you can control, make a plan, and stick to the plan

What next?

Remember what motivational speaker, Brian Tracey, says on the subject:

“You cannot control what happens to you, but you can control your attitude towards what happens to you, and in that, you will be mastering change rather than allowing it to master you.”

Read other inspirational quotes about sticking to what you can control

For more on this subject, please see the article I wrote called Good behaviours

If you have any concerns or questions, please give me a call.

Lance Baron

Certified Financial Planner (CFP) based in East Sussex, UK. We support people in Southeast England with more than £500K to invest by building a financial plan that will help them live the life they want… until age 100