‘Keep calm and carry on’ was a motivational poster campaign produced by the UK government in 1939, in preparation for World War II.


The campaign evoked the archetypal British qualities of stoicism, self-discipline, fortitude, and staying calm in adversity, as embodied in the phrase “stiff upper lip”.


Posters from the campaign re-emerged in the early 2000s and the poster’s design and catchphrase found their way into popular culture, with many amusing and satirical reworks of the original.


The phrase ‘keep calm and carry on’ springs to mind as I write this article, with the coronavirus (or COVID-19) turning out to be the biggest destroyer of wealth since the 2008 global financial crisis, wiping out trillions in value off global stock markets.

“So, what should an investor do?” My answer is – keep calm and carry on by focusing on what you can control

Not surprisingly, I’ve been fielding phone calls from concerned clients (albeit typically clients who have not experienced this kind of market sell off before). The question from these clients is the same as in past similar crises: “So, what should an investor do?” And my answer is the same – keep calm and carry on by focusing on what you can control.


Knowing what you can control and what you can’t control is crucial when it comes to successful investing over the long term and this is seldom more important than in volatile markets such as these. In this article, I explore this idea with some practical examples.


Before going into more detail, I’d like to mention an excellent blog written on 3 March by Joe Wiggins (https://behaviouralinvestment.com/), which was drawn to my attention by a colleague. Wiggins warns of the futility of trying to forecast how the coronavirus outbreak will pan out:


If investment decisions are being made related to the progression of the outbreak, it is worth considering the complexity of such predictions. It is far more than anticipating the spread of a virus (which in itself is an improbable feat); but the second and third order effects – the decisions politicians will make, how people in those countries will behave and, crucially, how investors will react.  Even if we had perfect foresight of how the virus would evolve over the coming months, it would still be impossible to confidently predict the market and economic implications.

The new coronavirus outbreak inevitably creates a tail risk of severe economic dislocation and market weakness, but nobody can possibly have any confidence in the probabilities around such sharply negative outcomes occurring. The idea that we can correctly gauge whether financial markets are accurately ‘pricing’ such uncertainty is entirely spurious.

Although the coronavirus outbreak (and the reaction to it) has the potential to precipitate an economic slowdown, earnings recessions and severe market decline (from a purely financial perspective); being a long-term investor means continually facing such risks. It is simply that the virus is currently the most salient and available potential cause of such a scenario.  We should have a portfolio that is commensurate with our willingness to withstand them, from both a financial and behavioral perspective.

Any communication related to this issue should be focused on the general principles of good investment behavior during times of stress and volatility. Not specific commentary about a virus over which nobody has even a modicum of certainty over future developments.

Sensible investment rules such as diversification, rebalancing and adopting a long-term approach are only prudent because financial markets and human behavior are so unpredictable.  If we had greater confidence about the future, they would be entirely unnecessary.  Now is not the time to abandon them.

This brings us back elegantly to the topic at hand – those things that investors can and can’t control.


There are a number of areas that people spend way too much time complaining about and thinking they can control, but for purposes of this article I have listed only a few, along with a corresponding activity that you actually do control and that you should spend more time focusing on. Other areas over which you have no control include politics, taxes and the economy.

1. What you have no control over – the stock market

You’ll often hear or see a news headline saying why the stock market was up or down on a particular day. But do they really know why it went up or down? A study once found that 75% of the time there is no rational explanation for big moves in the stock market, either up or down.


The stock market is a collection of individuals, portfolio managers, unit trust funds, institutional investors and more. Do all of their goals line up exactly on the same day? Of course not. There are infinite reasons why one party is buying, and another party is selling on any particular day.


Stephen J Dubner, co-author of the best-selling book Freakonomics, once listed the kinds of  headline that you’re unlikely to ever read in the financial press. This was my favourite: Stocks Surge, Reasons Unknown; May Be Nothing More Than the Random Fluctuation of a Complex System.


In summary, don’t look too deeply into the stock market’s moves, especially in the short run. It will likely make little sense and you have no control over the emotions of the crowd in any event.

Inside Out of the Ordinary: meet the people that manage your wealth

2. What you have no control over – your investment returns

US stock markets have earned about 10% a year over the very long-term. But that doesn’t mean that it’s a straight line up every year. You don’t just check in on 1 January and collect your 10% on 31 December. Returns are typically all over the place.


To illustrate the point, take a look at the past 20 years of annual S&P 500 results: 31.49%, -4.38%, 21.83%, 11.96%, 1.38%, 13.69%, 32.39%, 16.00%, 2.11%, 15.06%, 26.46%, -37.00%, 5.49%, 15.79%, 4.91%, 10.88%, 28.68%, -22.1%, -11.89%, -9.10%. It would be great to earn consistent returns year in and year out, but the reality is that the whole risk-reward relationship doesn’t work that way.


In any event, who knows if that 10% a year will still be the case in future? In fact, a good argument can be made that returns will be lower going forward. No one really knows. The lesson? Don’t expect to control your investment returns or they will control you.


What you do have control over – how much you save: This will have a much larger impact on the size of your net worth. And you get to control the amount you save each and every year. Start early and let compound interest help you along the way.

3. What you have no control over – short-term movements in individual shares

If you think the overall stock market fluctuates a lot, just imagine what all of the individual stocks that make up the market can do on a daily basis. Here are just some of the factors that can move the stock on a particular day: earnings announcements, revisions, analyst opinions, industry trends, competitor results, input prices, rumours, fear and greed, supply and demand, and so on.


Just know that there are so many working parts that the movement of the price of one stock will probably be nonsensical on most days. Even if you are correct in your analysis, other investors may not agree with you over the short-term. The control is out of your hands here and it lies at the feet of the collective market and its participants.


What you do have control over – costs: It’s simple really. The more you trade the higher your transaction costs will be. So keep it simple and lower your costs by limiting your transactions.

Keep calm and focus on what you can control

Once you are clear about the things that are outside of your control, you can spend more time and energy on the decisions that have an actual impact on your overall financial well-being. You will save yourself tons of time and stress.