Last year reminded everyone that investing is hard. It can be uncomfortable and unpleasant. Market volatility can diminish willpower and cause determination to waver. The main risk is not portfolio declines. The real risk is that instincts override the discipline investors need to achieve their long-term plan.

"Anyone who isn't confused doesn't really understand the situation." -Edward R. Murrow

In the short term, markets are about Psychology;

in the medium term, they are about Economics;

and in the long term, they are about Valuations.

There is a tendency, even among those who have owned Apple, to daydream about having jumped on board even earlier: "But what if I had bought Apple right after its IPO in 1980?!"

Fear of the unknown is an instinct that helps us survive, but acts against our better judgment as investors. It pushes us toward the perception of safety.

"On a daily basis, the S&P 500 trades at an all-time high 7% of the time and trades within 5% of an all-time high 36% of the time. This means that on 43% of all days, since the S&P 500’s inception, US large cap stocks were at or close to making new records. Anyone who tells you that new highs are abnormal or a reason to sell is a fool."

“Emerging markets” is an asset class of developing countries that share little in common geographically, economically, or in size. What does unite them is higher expected returns and higher risk than developed markets. 

Here are a couple of fantastic slides that highlight some favorite themes: diversification and the average investor's behavioral biases.

Albert Einstein called compound interest "the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."