If you invest in an index, you get the returns of the index, which is very good; but you also get the volatility of the index, which is bad. If you invest in the stock market, as represented by a broad market index fund, you will experience all the volatility of the stock market—the ups and downs, the highs and lows. And so will your emotions.

A takeaway here is that few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing different games than you are.

Consider when a market position is profitable but not as profitable as it once was. When that happens, he becomes married to the price at which it was the most profitable. He denies that the move is over, gets angry when the market starts to sell off, makes a bargain that he’ll get out if the market moves back to that arbitrary point, gets