I Had a Written Plan in March 2020. I Still Panic-Sold.

I want to tell you about the worst trade I ever made, because it wasn't caused by a lack of knowledge. In March 2020 I sold near the bottom. I had cash on the side. I had a plan I'd written years earlier that said, in plain language, what to do when markets fell. I had held some of those positions for over a decade. And I still sold, within a few days of the low, into one of the sharpest recoveries in living memory.

For a long time I told myself I'd made a mistake of nerve. I've since decided that's the wrong lesson. The problem wasn't that I lacked a plan. The problem was that my plan required me to make a decision in the exact moment I was least able to make one.

The theory was never the issue

If you're reading this, you already know the theory. You know that timing the market reliably is close to impossible. You know the S&P 500 has never produced a negative return over any twenty-year rolling period in its history. You know corrections are normal — since 1970 there have been roughly nineteen of them that never turned into bear markets, and the average recovery has historically been quick. None of that is secret. I knew all of it in March 2020, and I sold anyway.

So the honest question isn't "what should long-term investors do?" You know what you should do. The question is why so many of us, knowing it, do the opposite when it counts.

The behavior gap is the whole story

There's a number I think about often. Over the thirty years ending in 2013, the S&P 500 returned about 11% a year. The average investor, over the same period, captured only about 3.7%. That difference isn't fees and it isn't bad luck. It's behavior — the buying high, the selling low, the small acts of reacting that quietly compound. Even in a single ordinary year like 2024, the average equity investor underperformed the index by more than eight percentage points, mostly by being out of the market on the wrong days.

The gap between what the market returned and what investors actually earned is almost entirely made of moments like the one I had in March 2020. It's not a knowledge gap. It's a behavior gap.

Why a plan you have to "follow" fails

Here's the trap. A plan that says "stay invested during downturns" or even "buy when markets fall" still leaves the hardest part to your future self — the version of you who is frightened, watching the number drop, reading headlines that all agree it's different this time. That version of you is being asked to choose to follow the plan. And a plan you have to choose to follow is a plan you can talk yourself out of. I did. I found perfectly reasonable-sounding words for it at the time.

The fix isn't more willpower. It's removing the decision from the moment entirely.

Pre-commitment: decide before you're afraid

The thing that would have saved me in 2020 wasn't a better plan. It was a pre-commitment — a rule specific and mechanical enough that the frightened version of me had nothing left to decide.

Concretely, that looks like a few things:

• Make the buy automatic, not discretionary. Instead of "buy when markets fall," write "if the index falls 15%, I move this fixed amount of cash in on the first of the next month" — a trigger and a date, not a feeling. The date matters. It stops you waiting for a bottom that only exists in hindsight.
• Deploy in tranches. Split your reserve into a handful of pieces released at set drawdown levels. No single scary day has to be "the" day, so no single scary day gets to talk you out of it.
• Write your sell rules while you're calm. Decide the prices and the sizes now, in tranches, so that when something spikes or crashes you're executing a decision your rested self already made, not improvising with your pulse up.
• Put it somewhere you'll actually follow it. A plan in your head is a suggestion. A plan written down, with numbers, is closer to an instruction.

What "boring" actually buys you

I'm wary of pretending discipline is easy, because it wasn't for me and a written plan alone didn't deliver it. What pre-commitment does is narrow the number of decisions you have to make when your judgment is worst. You are not trying to be braver than you are. You're trying to make fewer choices in the moments that punish choices.

The reason I want investing to feel boring is that boring is the state in which I make my best decisions. Excitement — the green days and the red ones — is where the behavior gap comes from. A calm, pre-committed rule set is how you keep the returns the market is already handing you, instead of donating a chunk of them back through your own reactions.

I still made the mistake, years into investing, with cash ready and a plan in a drawer. If that can happen to someone who knew better, it can happen to you. The good news is the cure isn't knowing more. It's deciding earlier — while nothing is on fire — exactly what you'll do when it is.