We Asked Ben Carlson How an 86% Crash Still Led to 8% Annual Returns

Risk is unavoidable regardless of stance

As Carl Richards notes, risk is what remains after you've thought of everything—whether you bury cash, buy bonds, or invest aggressively, some uncertainty always persists.

Investors focus on sensational over statistical risks

People obsess over shark-attack-style risks like geopolitical crises while ignoring mosquito-style dangers like financial panics, despite the latter being what actually appear on long-term charts.

Markets bottom before economic headlines improve

Markets bottomed in October 2022 at 8% inflation, proving that waiting for positive headlines means missing the recovery, as stocks move before earnings or unemployment data peaks.

1929 crash still yielded 8% annual returns

Investing at the September 1929 peak meant suffering an 86% crash immediately and continued volatility through WWII, yet still produced roughly 8% annual returns over the long run.

Inaction often outperforms professional strategies

Chris Davis's mother outperformed his firm's active strategies by simply holding individual stocks for decades without trading, illustrating that doing nothing is often the hardest but most profitable work.

Action bias drives unnecessary trading

Like soccer goalies who dive 95% of the time despite data showing staying center improves save rates, investors trade to avoid looking idle even when inaction produces better results.

Personal inflation varies from government averages

Carlson frames inflation as a personal finance problem rather than an investing one, noting that individual living costs vary widely and hedges like gold are unreliable compared to fixed-rate mortgages and stable employment.

ETF explosion requires systematic investment filters

With thousands of new ETFs and AI-generated strategies creating a fire hose of options, successful investing now depends on having strict filters to limit decisions rather than trying to time markets perfectly.