INTRODUCTION
Standing Up to Uncertainty

DOES THE CHALLENGE OF MAKING INFORMED DECISIONS ABOUT YOUR life seem far more complex today than it did even a short time ago? Does the future—your own and that of the world—feel highly uncertain, perhaps even precarious?

We can sense you there, nodding in agreement. We would also wager that you would love to have a crystal ball that could tell you how the future will unfold, enabling you to make prescient decisions as you glide through life. Indeed much of today's media aims to quench that thirst for guidance, projecting a steady stream of “experts” onto our screens, each of whom is rife with insight to help us understand how things will unfold. And we lap it up, even though we have seen all too often how their predictions are mocked by the actual turn of events.

So we need to say right at the outset that you’ve just picked up a book that is not going to tell you what's going to happen this year or next. It would certainly be much easier to market a book that reveals our “three smart money secrets”—everyone's a winner! Once in a great while, those sorts of books guess right—but we cannot in good conscience make that pitch for one simple reason: the future has yet to be written. There are no simple formulas that can be relied on in this complex and unpredictable world.

The good news is that this book offers something even more valuable: a dynamic framework that will help you navigate the stormy times in which we live. The tools we offer are designed to keep you nimble, which you’ll need to be as the ground continues to shift. Because although we cannot tell you how things will change, we do know that they will change.

Although humanity has faced immense challenges before, the sense that things really are different this time is one that is shared by the US military. They coined the acronym VUCA, which stands for volatile, uncertain, complex, and ambiguous. Interestingly, they started using this term before the 9/11 attacks, superstorms, the financial meltdown, and all the other events that have pummeled us in this fledgling century. At the same time, forward-looking companies have turned the complexity of our times into opportunities; Fast Company calls this the Age of Flux, “defined more by fluidity than by any new, settled paradigm. If there's one consistent pattern, it's that there is no pattern.”

It is ironic that in these turbulent times, when we most crave a road map to show us where we are going, our visibility into the future is most limited. It's like trying to drive through a thick fog and realizing that no one has invented a fog light that really works and that the maps we have are useless because we cannot see the signs.

Many investors swerved to the side of the road, stopping wherever they were when the fog rolled in. They have bailed on Wall Street but don’t have a clue about what to do instead. Even while the Dow was steadily climbing after the crash, individual investors kept yanking money out of stock mutual funds right through 2012. Much of that cash has been parked in today's version of a mattress: bank accounts earning such minuscule interest that they do not begin to keep up with inflation or even bank fees. Stung by previous declines, and bewildered by today's complexity and uncertainty, it's too easy for investors to imagine falling into a giant pothole if they take their foot off the brake.

Others, with a stiff upper lip, kept driving just as they did before. They stayed true to their investment discipline; and despite bone-jarring earthquakes (two of the worst bear markets in modern US history occurred within the first decade of this century), they stayed on the road, followed all the rules, and actually, as of this writing, are feeling somewhat vindicated, as the market did come back. Probe a little deeper, however, and you’ll rarely find anyone who's confident that things have returned to normal. The widely used term new normal implies that the old rules about how to be a successful investor may no longer apply and that we need to fundamentally rethink our assumptions about economic growth. Even with the strong bounce of 2009–2014, overall stock market returns since the peak of 2000 are measly by historical standards: as of June 2014, real returns after inflation for the S&P 500 were just 1.2 percent annualized.

This book is for both kinds of investors: the ones shivering in their parked cars, waiting for the fog to lift, and the ones on cruise control, telling themselves that everything is fine but unable to tune out the disturbing news that keeps intruding on the hour. Of course most of us can relate to each of them; some days we jump behind the wheel and crank up the tunes, just like the old days, but other times, perhaps after seeing too much carnage along the highway or hearing about an approaching storm, we hunker down and stay put.

Wherever you have been, our focus here is on helping you get where you want to go. To guide your way forward, this book offers a pairing of two central ideas: resiliency and embracing an expanded view of what it means to “invest.”

The first, resiliency, offers an invaluable set of principles that can guide our decisions in this fast-changing world, keeping us responsive in the decades to come. The second arises from our experience as investment advisors, through which we have come to appreciate the pivotal role that investing plays in shaping the wholeness of our lives and our collective future.

By weaving together these two essential themes, we developed the framework that you are about to learn: resilient investing. This toolkit can help you build a life in accordance with your dreams, no matter what the future may bring. With it you’ll learn how to take action, stand up to uncertainty, and stay flexible.

Here is a first peek at these two complementary ideas.