How to Approach Stock Market Investing Through Surges and Falls

In this episode of Motley Fool Money, Motley Fool Personal Finance Expert Robert Brokamp continues the conversation with Ben Carlson, who is the director of Institutional Asset Management at Ritholtz Wealth Management, the writer behind the “A Wealth of Common Sense” blog, the co-host of the Animal Spirits podcast, and the author of “Risk and Reward: How to Handle Market Volatility and Build Long-Term Wealth.” Listen to Part 1 of this conversation.

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A full transcript is below.

This podcast was recorded on April 19, 2026.

Ben Carlson: They've been beat over the head for so many years and decades of people telling them and people like you at the Motley Fool and its people like and a blog. Hey, when stocks go down, you don't run out of the store because they're on sale, you rush in to buy, and it seems like people have actually learned. I make the case all the time that I think investor behavior has actually gotten better over time.

Robert Brokamp: That was Ben Carlson, author of the Wealth of Common Sense Blog, co-host of the Animal Spirits podcast, and the author of the upcoming book, Risk and Reward, How to handle market volatility and build long term wealth. I'm Robert Brokamp, and today is Part 2 of my conversation with Ben, during which we discuss the risks of investing in individual stocks, market valuations, balancing, saving for the future versus enjoying life today, and the career advice we give our kids. We've been talking about the performance of broad asset classes here which you can get exposure to through a low cost index fund. But what about individual stocks, which a lot of our listeners own? Because even though the US stock market has always recovered from every downturn, not every stock does. How do you approach investing in individual stocks?

Ben Carlson: I highlight the work of Hendrick Bess and Binder in here, and he's a professor at University of Arizona State, and he talks about the fact that over the long haul, the concentration of the US stock market is probably more than you think. His definition of long term is even longer than mine, probably. He's looking at like 100 years of data, and he says, basically, 60% or so of the companies fail to keep up with TBLs or cash, right, over the very long term. The other 30% in change more or less keep up with that, maybe a little better, and then something like 4% of all stocks are account for all the gain. It's the big ones you. Apple and Exxon and Amazon and Google and NVIDIA, and these huge stocks, from a Market cap perspective, have given investors all their gains over the past 100 years or whatever. His point is there's a lot of different ways to look at it. The one way to look at it is if you own just one of these winners, you're probably set. All of your other losers are you can offset all of them, so if you're an individual stock picker, as long as you have, again, that intestinal fortitude to stick with a long-term winner like that can pay off a lot of bets. It's almost like a VC portfolio, a power. If you owned Apple for 20 years, it didn't matter how bad you did in your other portfolio picks. Like, that one offset all of the losers. I think that back to the diversification piece, casting a wide enough net helps too that you want to make sure that you are able to get some of these winners, and have them in your portfolio in some way. That's the diversification piece is, if you cap and miss out on a lot of these big winners, it's going to be tough. The other thing is, obviously, he's looking at 100 years of data, so a lot of these companies that ended up going under and not making it, you could have gotten fantastic returns for 1, 2, 3, 5, 7 years before these companies petered out. We're seeing now some huge brand name stocks, Nike and Disney and some of these really well known companies that are doing really poorly right now, but owning them historically could have given you fantastic returns. The timing of the ownership, too, and when you get in and get out, obviously, that can matter, too. But my personal takeaway is just casting a wide enough net to make sure that you own these winners and finding a strategy that forces your hand to hold them and not give up on them because it's easy to buy. I think it's easy to sell for an investment. I think the holding is the hard part for a lot of people, because no matter the company, no matter the index, no matter the asset class, you're going to have drawdowns eventually. Then you question yourself do I lean into the pain and buy more? Do I sell it here and try to just recoup my losses else where I think that's the hard part for people is just knowing when to get in, when to get out, and when to really hold still, not do anything.

Robert Brokamp: Talk about investing in the stock market. You just talked about buying and selling. The buying is, of course, with whenever you decide to buy something or with your 401K contributions, the money's always going in. But then there's the decision about the selling. In your book, you bring up valuations to a degree. You mentioned how high they got during the.com bubble and way higher during the Japanese bubble, and these periods usually follow some pretty good years with some pretty good returns. Now, the Cape ratio at the third highest level ever, partially thanks to the S&P 500 returning 13% a year over the past 15 years, good bit above average. Is there a point where you think investor should say things are getting a little pricey. Perhaps I should take some chips off the table and is now one of those times?

Ben Carlson: I think that is a very intelligent sounding argument that basically never works. The hard part is, Peter Bernstein talked about this in his book Against the Gods. I really leaned on him heavily for the idea of mean reversion, and he said the hard part about mean reversion is when the mean is moving. It's a moving target, and I think you can make the case that the valuation, especially for the US stock market, has been a moving target over time. It's slowly but surely moved up over time, and the thing is, to your earlier point about this time is different, this time really is different because there's just more tech stocks than there were in the past, and they're more efficient. They're not having to spend a ton of money on this property plan equipment that goes away really quickly. A lot of it is intangible assets and their margins are really high, and they don't need as many employees as companies did in the past, and so Schiller's data goes back to 1871. Imagine comparing the stocks back then these conglomerates and these railroad companies that had to have massive physical outlay of assets, and it was hard work, and it required a lot of labor and people in spending on that labor. You don't need that as much anymore with tech stocks, so I think the fact that valuations have been trending higher actually makes sense. You mentioned the 401K piece. I think that's another part of it. Barriers to entry were so much higher in the past to invest. Even when I first started out, I was telling someone this story recently. I wanted to buy a Vanguard index fund, my first year out of college, and I couldn't because the minimum was $3,000. I didn't have $3,000. Now, there are no commissions, if you want to buy a stock, it's free at your brokerage. You can buy fractional shares. The minimums are effectively eliminated. You used to have to go down to a brick and mortar place and fill out some paperwork and write a check and wait a few days and then invest and usually invested based on whatever that broker told you to invest in. Now you can on your smartphone, open an account, hold up your bank account, put some money in, invest within minutes. I think for young people, breaking down those best entry has been great, and then you have this automatic investing revolution of money constantly going in in 401K in brokerage accounts, in IRAs, having a consistent buyer of stocks. That has to change the shape of valuations as well, and that's something that's happened over the past 40 years or so. I think even in the past ten years, the reduction in cost in the ease of access to the market has to change the valuations. That's why I think trying to time these things, this is a long winded answer to explain your question. Trying to time these things on valuations is very because you have people who pick a line in the sand and go. I'll buy when it gets back to the historical average of 16 times earnings or whatever, and then you realize that happened once in 2009 for like six months. Then it hasn't happened again since. Again, because that average is slowly surely moving up, so I think trying to time based on valuations, it sounds really intelligent. Geez, stocks feel really expensive here, I'm going to sell. You could have made that same argument for the past 10 years every year. I do think that trying to do that you can use valuations to set expectations, I think. I think that's perfectly reasonable. Valuations are way higher as they should be because we've been in a long bull market. Maybe my returns will be lower in the future. But does it mean that you should all of a sudden turn off your contributions and sell stocks? I think that's a harder proposition to get to for.

Robert Brokamp: Toward the end of your book, you include ten ways to lose money as an investor, and one is to fight the last war. You explained in the book what that means. You know, hedging the big risk after it just happened, buying a Black Swan fund after the crash already happened, getting inflation hedge after prices have already risen, basically looking in the rearview mirror for your investing decisions. What's the last war that you think people now might be at the risk of mistakenly fighting?

Ben Carlson: It's interesting. I feel like this decade has replaced the great financial crisis, which is music to my ears because I worked in the institutional nonprofit space, and after 2008, everyone wanted to sell Black Swan fund or a hedge fund or something that would hedge your downside risk. Everyone, all these big huge institutions, controlling billions and billions of dollars. That's all they want to invest in is these things that we take all the volatility away, hedge my downside, and they weren't concerned at all with the upside. There was no like what happens if things keep going up and working? I was like, No, this is career risk. I lost a lot of money. I'm not going to do that again, and that's when I learned about funding the last war. I was like I'm going to invest in what I wish I would have invested before this happened. If we could do it all over again, here's what I would have done. Now I'm going to do it again, and the last risk is rarely the next risk. I actually think it's interesting because I think what investors have been conditioned to do now is the opposite of that. It's no, we buy every dip. We go, you saw it last year during the Liberation Day thing where the S&P fell almost 20%. In April, a ton of money poured in. It's funny. They've been beat over the head for so many years and decades of people telling them and people like you at the Motley Fool and it's people like me and a blog, hey, when stocks go down, you don't run out of the store because they're on sale, you rush in to seems like people have actually learned. I make the case all the time that I think investor behavior has actually gotten better over time. I think people are becoming better investors, especially individuals. Mom and Pop forever was this nomenclature used to talk about an unsophisticated investor. They're DIY, Mom and Pop, retail investor. We're the pros. We know what we're doing. If anything, that's changed. The SMART money, I think, now resides in retail in a lot of ways. But I think there are a lot of new investors who haven't experienced an extended bear market 2022 was a decent run of the mill bear market. We were down 25%, and it lasted a year and a half to get back to the highs or whatever. But I think this extended drawn out where you have all these dead cat bounces and it feels painful and you're down 35 pot 4%. There are a lot of investors that haven't experienced that. I think you see what happens when people they run out of dry powder. Wait a minute. I bought all the dips. Now it's dipping again. Now what do I do? I think that's an interesting scenario to think about. When we have an actual recession, we haven't had a real recession in 17 years. We had that one month period in COVID, which was essentially man made. We turned the Nintendo off, blew on the cartridge, put it back in, turned it back on again, and we threw a bunch of money at it. That wasn't a real recession even though unemployment went up, so I think that's going to be interesting to see, I don't know what the psychology will be for people when we have a real recession and a real drawn out bear market.

Robert Brokamp: To, of course, invest, you have to save money, and you've written a book about retirement. And when I was starting out in my career in my 20s, it was all save. Now that I'm getting older in my 50s, I'm wondering about the balance there, and I'm bringing this up now because you cited a cartoon in your book by Randy Glasburger. It was basically a guy in a financial advisor's office, and the guy says to the financial advisor. Explain to me why enjoying life when I retire is more important than enjoying life now. You've probably seen this in your life. I know I've seen it in mine where people save for retirement for decades and then something happens. They have poor health or they don't actually get the retirement they were looking for. They don't get to enjoy it. For you, as someone, both who thinks about this stuff, has written a book about retirement and is in the financial wealth advice industry. What do you think is the balance there on enjoying life today versus saving for the future?

Ben Carlson: I love that cartoon, because it does perfectly encapsulate it. Like you, I was always an early saver. I think it was just the way I was brought up, my personality. I was like, frugal to a fault in my 20s and 30s, and it probably helped me get ahead in many ways. But I think that mindset can be taken too far, and I think the big change for me was having kids and realizing like they're not going to be young forever, and at some point, they're going to want to leave the house and they're gonna want nothing to do with me, probably. When they're teenagers, so my wife and I had to make a concerted change of no, we have to enjoy some of this now. What's the point of having a big nest egg when you're older and not enjoying it now so it does have to be some balance. Working in the wolf management field, I've seen countless stories of people who ran a business their whole life. Great. We're going to sell the business. We're going to get a ton of money. Now we're going to enjoy ourselves because I've worked for 80 hours a week for 30 years, and we had a client who passed away not long after they sold the business. We had clients who were going to retire early and sail around the world, and one of them got cancer and passed away. I've seen these stories where you do all this planning, and then life throws you a curveball. The old saying make plans and God laughs. I do think that there has to be more balance, and getting older, too, that's been a big thing for me is just seeing this stuff, losing loved ones and dealing with kids and all this that there does have to be some balance, and with our clients, we tell them the whole reason that you delay gratification is to enjoy it. Find ways to enjoy it, to find those things in your life that you're going to enjoy. It's not just about seeing number go up into the right, and I can never spend it. There's a lot of people who for 40 years, they scrimp and they save and they have this mindset, and then retirement hits, and they go, I can't see the value of this portfolio go down now. It's got to just keep going up, and you have to retrain your brain to enjoy the money. I do think giving yourself little pleasures along the way and prioritizing the things that matter to you and spending on those things, you have to make sure you do that along the way, too, because if you get too far along the way, it's hard to turn that mindset around.

Robert Brokamp: Let's move on to business and career advice because I feel like I didn't have maybe a front row seat, but I was in the auditorium to see the growth of Ritholtz Wealth Management and your career. I was an early reader of Barry Ritholtz blog. I interviewed him way back in 2009, and I've been an early reader of your blog and listener to your Animal Spirits podcast, what's your co-host with Michael Batnick. It's genuinely one of my favorite podcasts, so let's start with Ritholtz Wealth Management. What do you think is the secret sauce to the firm's success?

Ben Carlson: It's funny. I wish we could have looked back and go. You know what? From Day 1, this is how we plan for things to go. But I read Barry back in the Day 2. He was one of the first blogs I read. I read him during the Graunal crisis and Josh coming out of that at the reform Broker. I was reading those guys, and they inspired me to start writing, and I think the one if there is a secret sauce, I don't think there really is, because I think so much it's really hard to give career advice because so much of it is just happenstance and chance. I look at my career, and it could have forked off in three different ways. I would have made one different decision, and I never would have thought that, for me, even perusing content was even a possibility back in the day. Sometimes the timing just has to be right. But we all started writing because we enjoyed this stuff, not because we set out to build a brand and start a company. I think people now see the potential benefits of it, and we get questions all the time from people like, hey, I want to start doing content, too, and I want to build an audience. I'm going to build a brand and I want to do all these things. I tell people like, I went into this with zero expectations. I was not trying to build an audience. I felt like I needed an outlet. I had something I had to say. I was in a career path where I wasn't really not that I wasn't enjoying it, but it didn't align with my values and my philosophy. I'm a principle person. I think there's a right way to do things in a wrong way, and I wanted to do things my way. I was butting heads with the organization I was with and I ought I need an outlet, so I'm going to start writing. It was cathartic for me, but I did it because I enjoyed it. If I didn't enjoy it, I never was stuck with it, because when I first started writing, no one was reading my stuff. But that also gave me a long runway to get better at it because I wasn't very good when I first started. I think you can get better at this stuff. I was really bad at podcasting when I started, but we worked at it and tried to get better I think a lot of these things, some people are just born with these things. Some people are born to be great writers, they're born to speak. I don't think I was born with either of those gifts. I think I had to work at it. I think that's something for people, my only advice to someone is just put in the time and effort because a lot of people won't do that. I think that's probably even more important than the age of AI, where the shortcuts are going to be easier than ever. I think if you actually do put the time and effort and you can stand out from the crowd, I think that's the way to do it. It's funny once we all decided people are coming to us, and it's funny when I started writing, I had these financial publications and financial advisors coming to me saying, hey, I like the way that you explain this stuff in plain English. Can I use this for my clients? I never thought of that when I first did it. The audience I had in mind was my friends and my family. I'm writing for my father-in-law and my mother, so they understand this stuff. That's why I tried to speak in plain English and not dumb it down, but just simplify and make these complex topics more digestible. A lot of advisors were going our clients, they're not finance people like us that are in this stuff all the time. They have regular lives. They're normal people. They don't have time. They need to better understand this stuff, and I think we just realize that in the financial services industry, you're not producing a product where you hand someone the widget at the end of the day. This went for a factory. We built it along the way, all the steps. Here's your widget. It's a service that requires trust. In a trust faith based business, people want to work with others that they like and respect and communicating with people, whether it's through writing or a podcast or video is a great way to build that trust. That's what we learned. Again, we didn't have that figured out on Day 1. But once we did figure it out, we said, what are ways that we can do this even better? I think that's what we figured out was just the trust factor. You narrowed the window between a yes and a no from a client. Yes, this is a person or organization I work with or now that I see what's behind the curtain, I don't really want to, but thanks anyway. I think that's what we learned is just how important trust is in this whole process, because financial planning is something that's just never done. You don't just hand someone a binder and go, Here you go. Go do it. It's a process. You got to make sure that you want to work with these people for the long haul. That's a long term relationship.

Robert Brokamp: I had a civil story. I was a financial advisor with what was then Prudential Securities, and the immediate people I worked with were good people. But otherwise, I was put in positions where I was encouraged to sell things that I didn't believe in, so I left and started working at the Barry started as an editor, was not a great writer at the beginning, and then just improved it over time. The podcast part is interesting, too, because I wrote literally hundreds of articles before I ever did the podcast, and then I would go to member events, and people would always bring up the podcast because I think it's the personal connection. Words on a page. You have personality. We're the Motley Fool. You have a lot of personality in your articles. But it's not the same as that personal connection of having someone feeling like they're talking to you about their investments, and it builds that trust.

Ben Carlson: I think we underestimated that part of it, too. You get feedback on your blogs, but you can tailor your blogs and you edit it along the way. But when you're sharing your own stuff and people hear you talk, then you're right, it breaks down those walls even further. On a podcast, they end up feeling that they know you, so you're right. The feedback you get is almost ten times stronger than something that you write, because people they can hear the inflections and hear what person you are and your personality. I probably should have known this because I'm a listener of podcasts, but it's something that you don't understand. I guess if we're bringing this back to investment analogies, it's a diversification strategy. You're casting a wide net get in front of people. Some people just prefer to read. They want something in their inbox. They want to read it. I hate to be like a generational person here, but the generations it's older investors tend to still be readers. I still get emails from people all the time. Hey, how do I print out your articles or I can read it on paper? I think I know how old you are probably by saying that. Maybe it's younger, middle aged people who are more into podcasting very young people are more into YouTube and stuff. I think one of the things we've learned is you have to go where people are. You can't force someone to consume your content because you think it's great. You have to find people where they're going to consume it.

Robert Brokamp: Final question here, still related to your career. I don't think you're first of all, giving yourself enough credit for your success, but you pointed out in your book that the best career advice you've ever received is to become indispensable to whoever you're working for. The way I've expressed it to my kids is always be looking for ways to add value. Don't do just what's expected of you, and you found a way to do that.

Ben Carlson: I think someone told me earlier in my career. Go to your boss and figure out, the 20% of their job that they hate to do and take it off their plate for them. Especially, like you said, as younger, I'm thinking of my kids, too. Like, what career advice am I going to give them, especially in an ever changing world of AI, because all these stories about what AI is going to do to the nature of work that stuff does terrify me thinking about what it's going to mean for my kids someday. You're right. Even if you can't plan out your career advice to a I'm going to go down this path and I'm going to get this job and I think being indispensable and just being a person that can be relied on, and I think just solving people's problems. We hired a guy in the last year or so at our firm who came to us and said, I can make the best charts for you. I sent us a chart book. He said, here, check out this chart book, and we were just in the process of overhauling our presentations saying we need to make this look better. He say, "Here, let me do it for you." We didn't even look for it. He became indispensable to us because he was doing something that we couldn't do better, and he could do it better than we could. Now he's part of the firm, we hired him on as a temp at first. He became so good that we couldn't let him go. I think that's the thing that matters is just solving people's problems and making their life easier. Because people aren't going to necessarily go out of their way to be a mentor to you. Sometimes you have to make your own way and figure it out, and I think that's the point as a young person.

Robert Brokamp: While Motley Fool listeners, if you want to learn more from Ben, check out his blog, a Wealth of Common Sense, his animal spirits podcast, and pick up a copy of his new book. Risk and reward, how to handle market volatility and build long term wealth available on May 12. Ben, this has been great. Thanks so much for joining us.

Ben Carlson: Thanks for having me.

Robert Brokamp: Thank you for listening, and thank you to Bart Shannon, the engineer for this episode. As always, people on the program may have interest in the investments they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell investments based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. I'm Robert Brokamp. Fool on everybody.

Robert Brokamp, CFP has positions in ExxonMobil and Walt Disney. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Nike, Nintendo, Nvidia, and Walt Disney. The Motley Fool has a disclosure policy.