The Discipline of Staying Put
July 2026 Letter to Our Clients
Investing can teach us so much about human nature because it involves one of the biggest mirrors on the human psyche: money!
I think we can all agree that the optimal outcome of investing is to buy low and sell high. Yet, our ‘collective’ actions show a big chasm between our beliefs and our actions.
When an investment has struggled, a normal instinct is often to move away from it. Sell it low! When another investment has been producing exceptional returns, we feel compelled to own more of it. Buy high! Thus, if we follow our natural instincts, we break the first maxim of investing.
I present to you the facts. You know by now, at Conscious Wealth we don’t really buy domestic mutual funds, nor do any serious large investors. Nevertheless, they have a lesson to show us. What we find is that of those that ranked in the top quartile for the five-year period ending December 2021, only 35% remained in the top quartile just one year later. Two years later, almost none did. By the end of 2024, not a single fund remained in that top quartile.
The lesson here is that strategies work, then they don’t work, and then they do. What this chart doesn’t show you is the inflows into the winning funds. How many of us, at least once in our lives, looked at the 401K winner and picked the best performer? What these facts tell us is that the best performer today may not be the best tomorrow.
What we propose at Conscious Wealth is to stick to your convictions instead of jumping around from strategy to strategy; it is important to believe in your strategy thesis.
Every thoughtful investment discipline—whether it emphasizes growth, value, quality, small companies, large companies, momentum, or something else—will experience seasons when it appears brilliant and others when it appears broken.
We have all heard it before: Past performance is no guarantee of future results.
Here is the hard part. Markets are at all-time highs. They won’t always be there. That is a fact. In these times we need to examine what we own and be sure we are willing to hold them during a market correction. Because downturns in the market are accompanied by emotions. And emotions are great but can’t be trusted in investing. Markets will continue to rotate. Leadership will change. Headlines will tempt us to react. Discipline requires us to separate temporary performance from long-term conviction.
As I alluded to, our portfolios are performing exceptionally well. And we are grateful for the progress our clients have made. We believe success is something to appreciate with humility—not because it guarantees what comes next, but because it reflects the value of remaining patient and disciplined through the periods when that discipline was much harder to maintain.
So, get out there and enjoy the summer. Find some lake time. Go down a river on a tube. Eat fresh summer vegetables, like tomatoes and cucumbers. There is abundance all around us.
As always, thank you for the trust you place in us.
If you have questions about your portfolio, the markets, or simply want to revisit why you own what you own, we would be glad to have that conversation.
In Abundance,
Brandon Hatton,
CEO & Chief Investment Officer
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Investing can teach us so much about human nature because it involves one of the biggest mirrors on the human psyche: money!
I think we can all agree that the optimal outcome of investing is to buy low and sell high. Yet, our ‘collective’ actions show a big chasm between our beliefs and our actions.
When an investment has struggled, a normal instinct is often to move away from it. Sell it low! When another investment has been producing exceptional returns, we feel compelled to own more of it. Buy high! Thus, if we follow our natural instincts, we break the first maxim of investing.
I present to you the facts. You know by now, at Conscious Wealth we don’t really buy domestic mutual funds, nor do any serious large investors. Nevertheless, they have a lesson to show us. What we find is that of those that ranked in the top quartile for the five-year period ending December 2021, only 35% remained in the top quartile just one year later. Two years later, almost none did. By the end of 2024, not a single fund remained in that top quartile.
The lesson here is that strategies work, then they don’t work, and then they do. What this chart doesn’t show you is the inflows into the winning funds. How many of us, at least once in our lives, looked at the 401K winner and picked the best performer? What these facts tell us is that the best performer today may not be the best tomorrow.
What we propose at Conscious Wealth is to stick to your convictions instead of jumping around from strategy to strategy; it is important to believe in your strategy thesis.
Every thoughtful investment discipline—whether it emphasizes growth, value, quality, small companies, large companies, momentum, or something else—will experience seasons when it appears brilliant and others when it appears broken.
We have all heard it before: Past performance is no guarantee of future results.
Here is the hard part. Markets are at all-time highs. They won’t always be there. That is a fact. In these times we need to examine what we own and be sure we are willing to hold them during a market correction. Because downturns in the market are accompanied by emotions. And emotions are great but can’t be trusted in investing. Markets will continue to rotate. Leadership will change. Headlines will tempt us to react. Discipline requires us to separate temporary performance from long-term conviction.
As I alluded to, our portfolios are performing exceptionally well. And we are grateful for the progress our clients have made. We believe success is something to appreciate with humility—not because it guarantees what comes next, but because it reflects the value of remaining patient and disciplined through the periods when that discipline was much harder to maintain.
So, get out there and enjoy the summer. Find some lake time. Go down a river on a tube. Eat fresh summer vegetables, like tomatoes and cucumbers. There is abundance all around us.
As always, thank you for the trust you place in us.
If you have questions about your portfolio, the markets, or simply want to revisit why you own what you own, we would be glad to have that conversation.
In Abundance,
Brandon Hatton,
CEO & Chief Investment Officer
