EVERYONE HAS A PLAN – AND HOW TO INVEST THROUGH UNCERTAINTY

The Tyson Principle

Tyson wasn’t talking about portfolio construction. But he could have been.

Every investor — every one — has a long-term plan. Diversified portfolio. Appropriate asset allocation. Offshore exposure for currency protection. Drawdown rate calibrated to last 30 years. The spreadsheet looks good. The projections are sensible. The logic is sound.

Then markets drop 15% in a month, oil hits $120, and the news cycle starts using words like “escalation” and “contagion.” Suddenly the plan that looked elegant on a screen feels very different as a lived experience. The numbers are real now. The losses are real. The uncertainty is visceral in a way that a Monte Carlo simulation never quite captures.

This is not a design flaw in financial planning. It’s a feature of being human. The question isn’t whether you’ll get punched. You will. The question is what you do next.

Uncertainty Is the Job

There’s a version of investment commentary that treats uncertainty as something to be resolved — a temporary cloud that will lift once we know what the Fed does next, or how the Iran situation plays out, or whether the oil price stabilises. When clarity arrives, the thinking goes, investors can get back to sensible decision-making.

That version is wrong. Uncertainty doesn’t lift. It just changes shape.

In 2001 it was 9/11 and the dot-com unwind. In 2008 it was a financial system that turned out to be considerably more fragile than the models suggested. In 2020 it was a pandemic nobody had priced in. Each felt like a genuinely new and unprecedented crisis. Each was followed, eventually, by markets that recovered, adapted, and moved to new highs — not because the problems went away cleanly, but because the world continued, companies continued generating earnings, and investors who stayed the course were rewarded for doing so.

The investor who understood this structurally — who accepted that uncertainty is the permanent condition of markets rather than an interruption to normal service — fared materially better than the one who kept waiting for clarity before committing.

This is what we mean when we talk about behavioural discipline. It’s not a warm and fuzzy concept. It’s the actual skill that separates good long-term investment outcomes from mediocre ones. Not fund selection. Not market timing. The ability to hold a sensible plan through uncomfortable periods without making decisions you’ll regret when the dust settles.

But the Retiree Problem Is Different

Here I need to make a distinction that often gets glossed over in generic investment commentary.

If you’re 42, still accumulating, with 20 years before you need to draw on your portfolio in a meaningful way — volatility is largely uncomfortable noise. A 15% drawdown is unpleasant to watch, but it doesn’t change your material outcome if you stay the course. Time absorbs it. History suggests patience is rewarded.

If you’re 67, drawing 5% annually from a living annuity, the calculation is different. Not because your investment philosophy should change — it shouldn’t — but because the sequencing of returns matters enormously when you’re withdrawing rather than contributing. A significant market decline in the early years of retirement, while you’re drawing income, can permanently impair a portfolio in a way that a 42-year-old accumulator simply doesn’t face.

This is called sequence-of-returns risk. And it’s the reason that telling a retiree “just stay the course, markets always recover” is technically true but insufficiently nuanced. The recovery matters. But so does what happens to your portfolio — and your drawdown rate — while you’re waiting for it.

This distinction matters not because retirees need to abandon long-term thinking — they don’t — but because the structure of their portfolio needs to account for what they actually need it to do: generate reliable income across a time horizon that could be 25 to 30 years, through multiple geopolitical crises, a few recessions, and at least one event that nobody currently has in their models.

What Adaptability Actually Looks Like

So we’re back to Tyson. The plan matters. Build a good one. But the plan is a framework, not a contract with the future — and the future has a well-documented habit of ignoring contracts.

Adaptability in a retirement income context isn’t about abandoning your investment strategy every time the news cycle darkens. That’s not adaptability — that’s reaction, and it’s expensive. What it does mean:

Maintaining a cash and income buffer. For retirees drawing income, having 12 to 24 months of spending needs in cash or near-cash means that a volatile market year doesn’t require selling growth assets at the wrong time. The buffer buys time. Time is the thing that makes long-term investing work. Protect it.

Building flexibility into your drawdown rate. A living annuity allows drawdown rates between 2.5% and 17.5% annually. Most retirees should be drawing somewhere in the middle range. In years where markets perform well, a modest increase in spending is fine. In years where markets are under pressure, maintaining or temporarily reducing your drawdown rate — if your circumstances allow — meaningfully improves long-term sustainability. Rigid, unchanging drawdown regardless of market conditions is itself a form of poor planning.

Staying invested in the long-term assets. This is the counterintuitive one, but it matters most. The biggest risk for most retirees isn’t that markets will fall — it’s that they’ll move to cash at the bottom, miss the recovery, and lock in a permanent loss. A well-structured retirement income strategy holds growth assets because it has to — longevity risk is real, inflation is real, and a 30-year retirement funded entirely from a money market account is its own kind of crisis.

Reviewing, not reacting. There’s a difference between a scheduled review of your plan in light of changed circumstances and a panic-driven portfolio restructure driven by a week of bad headlines. The former is prudent. The latter usually destroys value. If your circumstances have materially changed — health, income needs, family situation — then your plan should reflect that. If they haven’t, and the market has simply had a difficult quarter, the plan probably doesn’t need to.

The Plan Still Matters

None of this is an argument against planning. The spreadsheet is not useless because life doesn’t follow it precisely — it’s useful precisely because it gives you a reference point when things get uncomfortable. Without a plan, every volatile market becomes a decision point. With a plan, most volatile markets become noise.

What I’d gently push back on is the version of planning that treats the future as knowable if you just model it carefully enough. The oil price wasn’t in the model. The pandemic wasn’t in the model. Whatever comes next won’t be in the model either. The model’s job isn’t to predict the future — it’s to give you a framework robust enough to survive contact with it.

Mike Tyson, as far as I know, has never managed a retirement portfolio. But the principle holds. The investors who come through volatile periods intact are rarely the ones with the most sophisticated models. They’re the ones who built a sensible plan, structured it to absorb a punch or two, and didn’t abandon it the moment things got uncomfortable.

That’s not a guarantee of outcomes. Nothing is. But it’s the closest thing to an edge that most of us have.