As a little-known member of the Jackson Five, Michael, once sang “I’m starting with the man in the mirror” in reference to making a change. Now, I am not sure many would categorize Mr. Jackson as an investment expert, or even a philosopher, but there is real value in looking at yourself in the mirror… not in passing, not casually, but with a level of honesty that is often uncomfortable. A mirror has a way of cutting through narrative you might try to apply and does not reflect who you intend to be or who you hope to become. It reflects who you are, right now. And while that idea is often applied in a personal or moral sense, it may be just as important when it comes to investing.
Separate from asset allocation or debates about interest rates, earnings growth, or even stocks or bonds, there is a more foundational question that should come first: who are you as an investor? The answer to this question is critical, because all investing should focus on putting assets “to work” toward your goals within the confines (or, maybe, context) of your risk profile.
“Who am I as an investor?” seems like an easy question to answer when markets are calm. In steady or rising environments, most investors discover a healthy appetite for risk. Volatility feels theoretical, drawdowns feel temporary, and time horizons feel long. With the winds at your back (from a market standpoint), it is tempting to look in the mirror and see a version of ourselves that is patient, disciplined, and comfortable with uncertainty. But the mirror becomes far more honest when markets are not cooperating. Periods of heightened volatility, like the environment we are experiencing today, have a way of stripping away aspiration and replacing it with reality – at least, they should. During times of heightened volatility, portfolios shift faster, headlines become louder, and the distance between “long-term investor” and “concerned account holder” can shrink quickly. And in those moments, the mirror reflects something far more useful than confidence… it reflects truth. Not what you thought your risk tolerance was, but maybe what it actually is.
This is where investing shifts from a math problem to a human one. And, for those who know me, you know that I am generally thinking more along the lines of a math problem whether talking about investing, financial decision-making, or longer-term planning. Math is comfortable. However, it is the human element that can move markets and the human instincts that we have to work with when planning and investing.
Risk tolerance is not fully defined in a questionnaire completed in 10 minutes or during a single conversation with your advisor. Your risk tolerance is typically discovered over time, but can be truly revealed in real time, under real pressure, and when markets (or headlines) are negative and it seems like there might be turmoil ahead. It shows up in how you react to a 10% decline… or a 20% one. It is present in the questions you ask, the headlines you read, and the temptation to act when doing nothing feels uncomfortable. It is less about your ability to understand volatility and more about your ability to live with it. And this is why the mirror matters. Looking in the mirror as an investor is not about judgment. It is about alignment and ensuring that the portfolio you own reflects your goals and your beliefs, not the person you hoped you would be when markets were calm. Because a portfolio that is misaligned with your temperament is not simply inefficient… it is unsustainable.
Philosophically, goal-setting often begins with external markers: retirement age, future income target, or legacy objectives to name a few. These are important, but they are incomplete without internal clarity. What level of uncertainty can you tolerate along the way? What trade-offs are you willing to accept? How do you define progress when the path is not linear? These are not spreadsheet questions or, for that matter, even questions that have a clean, certain answer. They are “mirror” questions. Questions to be answered when you look in the mirror and decide to understand who is looking back at you and what their true goals and true appetite for risk and volatility really is. And, from a portfolio management perspective, the answers to the “mirror questions” have real implications. For example, they influence how much equity exposure is appropriate. They shape the role of defensive assets. They determine whether strategies designed to dampen volatility or generate income make sense in your broader plan. They guide how liquidity is viewed, not just as idle cash, but as optionality… the ability to act when others cannot. In short, the answers to your “mirror questions” inform how a portfolio is constructed, not just for near-term performance, but for long-term commitment. Now, that does not mean we don’t touch it or make tactical (or even strategic) changes, but it does mean those changes reflect a long-term, informed viewpoint.
Market volatility, while uncomfortable, can be seen through an optimist’s lens. Volatility acts as a kind of stress test, not just for portfolios, but for people. It reveals assumptions, challenges convictions, and, if approached correctly, provides an opportunity to recalibrate. Not necessarily to react, but to reflect. To look in the mirror and ask, with some degree of honesty: Is this still me? And, if the answer is yes, then volatility becomes something to endure, not something to fear. If the answer is no, then it may be time to adjust… not in response to the market, but in response to yourself.
Because investing, at its core, is not about predicting what happens next. It is about preparing for a range of outcomes in a way that aligns with your goals, your temperament (tolerance for risk), and your ability to stay the course when it matters most. And that process does not begin with an asset allocation, a forecast, a model… or even a risk assessment. All of those are important, but the process must begin by looking in the mirror.
