The Plan Isn't the Problem. The Moment Is.

I want to tell you about the worst investing decision I ever made, mostly because I made it with every advantage in place. I had held my positions for more than a decade. I had cash set aside specifically for a downturn. And I had a written plan, drafted years earlier on a quiet afternoon, that told me exactly what to do if the market fell. In March 2020, the market fell. I read my plan. And then I sold near the bottom anyway.

For a long time I misdiagnosed what went wrong. I assumed the plan had been flawed, so I kept trying to write better ones. Sharper thresholds. More detailed rules. Contingencies for the contingencies. What I eventually understood is that the plan was fine. The plan was never the weak link. The weak link was me, standing in the moment the plan was supposed to cover, discovering that a plan is still a decision you have to make again — and that it comes due on the single worst day to be making decisions.

The gap between knowing and doing

There is a number that captures this better than any story I can tell. Every year, DALBAR measures what ordinary investors actually earn, as opposed to what the funds they own returned. The two are not the same, because people buy and sell at the wrong times. In 2024, the average equity investor earned about 16.5% while the S&P 500 returned roughly 25%. That is not a rounding error. It is more than eight percentage points, in a single year, left on the table. And it did not disappear into fees or bad funds. It disappeared into behavior.

What I find clarifying about that figure is what it rules out. The gap is not caused by a lack of information. The people giving up those returns are not, by and large, ignorant of how markets work. Many of them could recite the case for staying invested more fluently than their advisors. I certainly could. I knew that downturns are temporary, that timing the bottom is a fantasy, that selling into fear is how long-term money gets destroyed. I knew all of it. And it changed nothing about what I did at 2 a.m. with a red screen in front of me.

That is the uncomfortable core of behavioral investing. The distance between knowing what to do and doing it is not closed by knowing more. You cannot study your way across it. The decision sits there, live and open, waiting for you to walk up to it in the exact emotional state that guarantees you will get it wrong.

Why a plan alone doesn't hold

A written plan feels like protection because, on the calm afternoon when you write it, you are a completely different person than the one who will have to use it. Calm-you is thoughtful, patient, and slightly smug about how disciplined you're going to be. Calm-you writes an excellent plan. The trouble is that calm-you is not in the room when it matters. The person in the room is frightened, sleep-deprived, watching the number that represents years of saving drop by the hour, and entirely capable of deciding that this time really is different.

And here is the quiet trap: a plan still requires that frightened person to choose to follow it. It hands them a piece of paper and says, "execute this now." Which means the plan has not actually removed the decision. It has just written the decision down. When your hands are shaking, a decision you still have to actively make is barely more protection than no plan at all. I know, because I had the paper, and I overrode it in about the time it takes to log in.

Pre-commitment, and why it's supposed to be boring

What would have saved me was not a better plan. It was not being asked. The thing that actually holds under pressure is pre-commitment: a decision made once, while calm, and then structurally removed from your reach so that the frightened version of you cannot renegotiate it. The classic image is Ulysses tying himself to the mast before the sirens — not because he was strong, but because he knew he wouldn't be, and arranged the world in advance so his weakness couldn't act.

In practice this is deeply unglamorous. It looks like an automatic purchase that runs on a schedule whether or not you feel like it. It looks like a standing rule to deploy cash in fixed steps at fixed declines, set up so that it executes on its own rather than waiting for your blessing. It looks like arranging things so that the default — the thing that happens if you do nothing — is the thing you would have wanted calm-you to choose. The common thread is that the moment of decision has been moved out of the crisis and into an ordinary afternoon, and then locked.

None of this is exciting, and that is the entire point. The reason it works is precisely that it is boring — a process, running quietly, that does not depend on you being brave or clear-headed on the day you are neither. Every feature that would make it feel more engaging, more responsive, more like something you actively pilot, is a feature that hands the decision back to the frightened person. That is the version of investing I keep trying to unlearn: the one that feels like a casino, that rewards attention and reaction, that makes doing nothing feel like negligence.

What I do differently now

I still write plans. But I no longer treat the plan as the finish line. The plan is just the draft of an instruction I then try to make automatic, so that following it doesn't depend on my composure. I assume, now, that on the important day I will not be composed. That assumption has made me calmer than any amount of confidence ever did, because it means the outcome no longer rests on my managing to be a better person under pressure than I have ever actually been.

If you take one thing from my March 2020, let it be this: the goal is not to become someone who can hold the line by willpower in a crash. Almost no one is that person, and the ones who think they are usually haven't been tested yet. The goal is to make the line hold without you. Decide once, while it's quiet. Then get yourself out of the way.