As you review your quarterly statement this month, we want to share something counterintuitive: your quarterly statement should be the most data you look at for a while.
This might seem like an odd message to lead with, especially when the TSX is up over 20%[i] this year and global markets have delivered healthy gains. We're not sending this because we're worried about a downturn or trying to prepare you for bad news - quite the opposite. We believe the best time to discuss discipline and perspective is when things are going well.
When More Information Becomes Less Helpful
We started in this business when mutual fund prices were published in the back section of newspapers—always one day late. Today, we can check the real-time value of any security on earth from our phones while waiting in line for coffee. You'd think this technological leap would make us all better investors.
The research says otherwise.
A fascinating study published in Management Science examined what happened when Yahoo Finance terminated its free raw data service in 2017.1 Traders who lost access to this constant stream of market information didn't perform worse—they performed better. With less data to obsess over, they made fewer trades, but each trade was higher quality. The noise had been drowning out the signal.
This isn't just about active day traders. It's about all of us. When we have access to endless information, three dangerous illusions creep in. First, the illusion of knowledge—we start seeing patterns that aren't really there, like a gambler who swears they've cracked the slot machine code. Second, the illusion of precision—we believe that analyzing more variables makes our predictions more accurate, when it often just gives us more ways to be wrong. Third, the illusion of control—we cherry-pick data points that support our existing beliefs, convincing ourselves we've mastered the market.
The result? Overconfidence. And overconfidence, according to research published in the Journal of Behavioral Finance, is an investor's worst enemy.2
The Overconfidence Trap
Researchers identified overconfident investors by comparing what people thought they knew about investing with what they knew to be true. The findings were stark: when markets dropped 20%, overconfident investors were the most likely to sell—locking in losses and missing the recovery. Meanwhile, investors who accurately understood their knowledge level were more likely to buy during downturns.
Here's the humbling part: the overconfident group didn't just underestimate risk; they also overestimated it. They were also the most likely to trade on margin, chase penny stocks, and dive into cryptocurrencies. These aren't inherently bad activities, but they require expertise that many don't realize they lack.
The numbers tell the recovery story clearly. Since 1942, the average bear market for the S&P 500 has lasted just over 11 months, with an average decline of 37.1%.3 The average bull market? More than four years, with average returns of 147.2%. Selling in panic means missing the very recoveries that build wealth over time.
Why We Send You Statements (And Why You Shouldn't Stare at Them)The Elusive Growth Forecast
You may be wondering: if more data can hurt performance, why do we send quarterly statements at all? Fair question, especially since we just spent several paragraphs explaining why ignoring information can be good for your wealth.
The answer is both practical and philosophical. Legally, we're required to provide regular account updates - that's “compliance 101”. But there's a more important reason: accountability.
Transparency isn't just a buzzword for us. It is the foundation of trust. Your statement provides a complete disclosure of every holding, transaction, fee, and cost associated with your account. Nothing is hidden. Nothing is obscured. You have the right to see exactly where your money is, how it's performing, and what you're paying for our services. This level of transparency is non-negotiable because your financial future deserves nothing less than complete visibility.
Your statement isn't meant to be a daily dashboard you obsess over. It's a checkpoint that serves three specific purposes:
First, verification. You need to confirm that what we're doing aligns with what we agreed to do. Are the holdings correct? Are the fees what we discussed? This is your protection.
Second, context. Markets move. Quarterly snapshots help you see the trajectory without getting lost in daily noise. Think of it as checking your weight once a month versus ten times a day. The latter breeds anxiety without adding insight.
Third, connection to your plan. Your statement should prompt one question: "Am I still on track to reach my goals?" Not "Should I panic?" or "Should I chase that investment my friend mentioned?"
The irony is that the most successful clients we work with barely glance at their statements. They already know the answer to that third question because we've built a plan together. They trust the process. They understand that investing is less about perfect timing and more about staying in the market over time.
The Power of Predetermined Decisions
Here is what separates successful long-term investors from everyone else: they make decisions before emotions get involved.
When you have a financial plan with clear goals - perhaps retirement at 62, funding your grandchildren's education, or both - you create a framework that withstands market volatility. Your financial plan isn't a static document gathering digital dust. It's your playbook for moments when markets test your conviction.
Diversification isn't about owning a little bit of everything. It's about accepting that you can't predict which asset class will lead next year, so you position yourself to capture returns wherever they emerge. When US investments falter, international equities can pick up the slack. When stocks decline, bonds often serve as a stabilizing force. This isn't exciting. It's not supposed to be.
Discipline means something specific in investing: it means not abandoning your plan when it feels uncomfortable. Bull markets make everyone feel like a genius. Bear markets reveal who actually has a strategy. The research on market timing is unequivocal. A study by Dimensional Fund Advisors (DFA) examined 720 different timing strategies and found only 30 outperformed a simple buy-and-hold approach.4 And those 30? Likely just luck, like someone flipping heads ten times in a row.
What Actually Matters
We have noticed something over the years: the clients with the best outcomes don't necessarily have the highest risk tolerance or the most sophisticated strategies. They have clarity about what they are investing for.
They know their "number" - not in a vague sense, but specifically. They can tell you how much income they need in retirement. They understand that a 7% return that they stick with beats a 10% return they'll bail on at the first 15% downturn. They recognize that behaviour - saving consistently, rebalancing periodically, staying invested through volatility, tax planning - matters more than picking the perfect entry point.
This doesn't mean ignoring your portfolio entirely. It means checking in with purpose rather than anxiety. It means asking, "Has anything changed in my life that should change my plan?" instead of "What did the market do today?"
When we meet for your annual review, we're not just reviewing performance against benchmarks - though we do that. We are examining whether your portfolio still matches your life. Did you inherit money that changes your risk capacity? Are you thinking about retiring earlier than planned? Did a health issue shift your priorities? These are the variables that should drive decisions, not the latest market headline.
Moving Forward
As you review this quarter's statement, we encourage you to take a breath and step back. The numbers matter, but they're not the whole story. They're a single frame in a much longer film.
If you find yourself wanting to make changes based on recent performance - either euphoria or panic - call us first. The best decisions come from dialogue, not impulse. Sometimes the right move is to adjust. More often, the right move is to remember why we built your portfolio this way in the first place.
We live in an age of information abundance. But when it comes to investing, abundance isn't always an advantage. Focus on the few big levers that actually move the needle: consistent saving, appropriate diversification, cost management, and tax efficiency. The thousand small levers? They're usually just distractions dressed up as opportunities.
Your statement represents a moment in time. Your plan represents your future. Keep your eyes on the latter.
This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed.All investments involve risk, including the potential loss of principal. Leveraged ETFs and other complex investment vehicles may not be suitable for all investors and should only be used with a full understanding of their risks. Asset class performance varies over time, and diversification does not ensure a profit or protect against a loss. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. The opinions expressed in the communication are solely those of the author(s) and are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed. Mutual funds and other securities are offered through De Thomas Wealth Management, a mutual fund dealer registered in each province in which it conducts business and a member of the Canadian Investment Regulatory Organization (CIRO).