Chris Reilly’s note: Today, I continue my conversation with RiskHedge publisher Dan Steinhart...
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Chris: Dan, last time we talked about what worked in 2025 and why Cornerstone invested in top-performing sectors many ignored, including gold and international stocks.
Today, let’s zoom out. Because one of the most striking things you write about in the Cornerstone manual is how badly the average investor performs.
You cite a JPMorgan Chase & Co. (JPM) study showing the average investor earns about 3.6% a year over their investing lifetime. That’s shockingly low when the market itself does close to 10%.
Why is the gap so big?
Dan Steinhart: Because investing is easy in theory, but hard in real life. Your emotions work against you.
An investor can do literally nothing—just buy the market and hold it forever—and earn 9–10% over the long term. But it’s hard to do literally nothing! People get greedy or scared. They react at the wrong moments.
Over a 40-year investing career, those mistakes compound. That’s how the average investor ends up with 3.6%, even though the market has historically handed them 9–10% on a silver platter.
Chris: You point out the worst mistakes usually happen during drawdowns, not during good times.
Dan: I would say the most acute mistakes happen during drawdowns. Academics call them “drawdowns,” which makes them sound temporary and manageable. And they are temporary and manageable, to be clear.
But if you’re 58 years old and the market drops 30%, it doesn’t feel that way. It feels like your retirement is at risk. It feels like you failed your family. Those are the moments people bail on what’s meant to be a sound, long-term strategy.
But chronic mistakes happen more when the market is grinding higher. That’s when people sell their investments because of some perceived threat and never get back in, only to watch the market double, then triple, without them. That’s a story I’ve unfortunately heard from dozens of investors, especially after 2008.
Chris: You also reset expectations in the manual by walking through the greatest investors of all time.
Dan: Yes. Warren Buffett compounded at about 20% a year over more than five decades. That’s the best ever. A small handful of others managed around 15%.
Those people were all-time great professionals who dedicated their lives to investing.
So if you’re a normal person with a job, a family, and other priorities, expecting to earn those returns over a long time period isn’t realistic. The goal should be much simpler. Your first job as an investor is to get yourself into the range of market-level returns (blue bars) and stay there.
Once you do that, then you can think about more aggressive ideas like individual stock picking.
Chris: So Cornerstone’s job is not to turn you into Warren Buffett...
Dan: Correct. It’s to help people avoid the big, irreversible mistakes.
Over the last 20 years, Cornerstone has averaged returns of about 11.5% a year. That performance, over time, would put you in between market returns and the greatest investors in history. That’s pretty good, especially for a service as inexpensive as Cornerstone.
Chris: Let me push on something longtime RiskHedge readers might be thinking.
A lot of what we do elsewhere focuses on disruptive businesses, even crypto. Cornerstone sounds very different. ETFs. Gold. Broad asset classes.
What do you say to readers who feel like this conflicts with the rest of RiskHedge?
Dan: It’s not either/or. I’m not telling anyone to sell their disruptive stocks. Those stocks have done very, very well, as subscribers of Disruption Investor, Disruption_X, and our other advisories know.
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I created Cornerstone because it’s how I like to manage a portion of my own money. My priorities are strong returns, limited volatility, and low stress. The less I have to think about my investments, the better. Any reader who shares those priorities will probably like Cornerstone.
A lot of people treat investing as entertainment. There’s nothing wrong with that. I do it, too. I love learning about disruptive stocks and following Stephen McBride and Chris Wood’s research. But the ideal strategy for me is one I can mostly ignore for months and still know my money is aligned with the major trends.
Chris: Thanks. I should mention, because this might surprise people, that Cornerstone is our least-expensive service at RiskHedge. Considering the returns it produces, the time it saves, and the stress it relieves, it is easily one of the best deals in all of financial research.
Dan: Agreed.
Chris: And reader, provided you’re reading this before the deadline, you have an opportunity to claim an even better deal than usual on Cornerstone. If your goal is strong returns with less stress, this is the moment to take a serious look. Go here to claim your spot before this deal expires.
Chris Reilly
Executive Editor, RiskHedge