Human ingenuity is why the stock market goes up. It's a widely held, broad interpretation that I agree with. Zoom out on a hundred years of the S&P 500 and the line climbs so steadily it looks almost naive. Since those 100 years also included a depression, world wars, inflation, stagflation, bank failures, a pandemic, and crash after crash, you must maintain that belief in human ingenuity continuing in perpetuity to be an investor.

Despite the challenges inherent in our complex healthcare system, health keeps getting easier to protect. We can thank human ingenuity for this, also. That's the genesis of vaccines, screenings, new drug discoveries, understand more about protecting our health, and advanced treatments of chronic and acute diseases. That doesn't mean any one of us can still do most everything right and avoid all illness and injury anyway.

That's why I try to practice what I call "prepared optimism." I'm optimistic because people keep solving problems, and that drives the long-run trend in markets and health. Preparation acknowledges that the trend tells me nothing about what happens to me next year. Optimism is most likely to pays its dividends for people who are ready to get through the bad years where unavoidable events appear.

Health and wealth run on the same rules from opposite starting points. Most of us begin life with good health and no individual wealth at all. Some of what will happen to our health is predictable and some of it isn't. With health we're protecting what we were given, and with wealth we're building from zero. In both, the goal is to avoid unforced errors.

My mantra for both health and wealth: go back to first principles, plan on the best available evidence, plan, don't try to predict based on the past, and be flexible enough to handle what you can't imagine. Repeat.

Over time, stock prices follow company earnings, and earnings grow because people keep finding better ways to do things. Jack Bogle, the founder of Vanguard, split stock returns into two pieces. Investment return is what the businesses produce: the dividend yield when you buy in, plus how fast earnings grow after that. Speculative return is the change in how much investors are willing to pay for each dollar of those earnings, and it moves with fear and greed.

From 1871 to 2014, investment return averaged 8.6% a year. Speculative return averaged 0.4%! Nearly all of the long-run gain came from businesses producing more. Warren Buffett wrote in his 2016 shareholder letter that American business is virtually certain to be worth far more in the years ahead, and that what would get it there was "innovation, productivity gains, entrepreneurial spirit and an abundance of capital."

Since 1954, the S&P 500 has fallen 10% or more about once every 18 months and 20% or more about once every six years. Since 1928, it has fallen 30% or more nine times, roughly once a decade, and 50% or more only three times. Ordinary drops are common and catastrophic ones are rare, and I read both as the price of admission for the investment return.

As I write this, the Shiller CAPE sits around 41, more than double its long-term average of 17.8. CAPE stands for cyclically adjusted price-to-earnings ratio, or the S&P 500's price divided by its average inflation-adjusted earnings over the past 10 years. It shows how much investors are paying for each dollar of earnings, smoothed over a full business cycle. I can't tell you whether that means a drop next month or in five years. CAPE isn't a timing tool. There's no such things as an accurate timing tool.

Hendrik Bessembinder (a finance professor at Arizona State University) studied every U.S. stock from 1926 to 2016 and found that the best-performing 4% of companies accounted for the entire net gain of the market. The other 96%, taken together, matched Treasury bills. I can't pick the 4% in advance, just like almost anyone. So I largely hold baskets of stocks instead.

In health, the returns come from prevention. Researchers figure out what prevents disease, the USPSTF (United States Preventive Services Task Force) and specialty societies like the American Cancer Society turn that evidence into a schedule, and the people who follow it collect the gains. For colorectal screening alone, the Task Force estimates 286 to 337 years of life gained for every 1,000 adults screened from 45 to 75!

Colonoscopy lets us find and remove polyps before they become cancer. A heart attack that once meant weeks of bed rest now often means a cath lab, and cardiac rehab. Each of those moved a risk out of the column of things we can't control and into the column of things we sometimes can.

Some risks are still out of reach. No test catches every cancer in time, people with no risk factors still have life-ending heart attacks, and nobody knows how to prevent and cure many diseases yet. But science keeps shrinking that list.

Here's the caveat: progress only works if people use the results. A colonoscopy finds polyps in the people who show up for one, and a vaccine protects the people who get it. In 2018, 31.2% of eligible U.S. adults weren't up to date on colorectal cancer screening. Nearly a third! Our behavior decides whether what science has built gets a chance to work over time. Equity markets run the same way--the investment return only reaches the people who stay invested when the market is down to catch the recover on its best days, which are unpredictable.

In health, science has already shown us what improves our odds: screening on the schedule the evidence supports for your age and risk (for average-risk adults, a colonoscopy every 10 years from 45 to 75), eating mostly whole foods, maintaining a healthy weight, doing weight-bearing exercise, sleeping enough, wearing seatbelts and helmets, and never driving after drinking, to name a few. Consistently making good choices most of the time is how we maintain and improve our health over time.

I've learned to treat something as settled science when it holds up across many large studies over many years and independent expert panels like the USPSTF recommend it after weighing benefits against harms. Vaccines, screening schedules, and the habits above all clear that bar. I keep up with new evidence and don't relitigate settled science every time a headline shifts.

Many consider paying out of pocket for a test the evidence doesn't support, like a whole-body MRI, is another unforced error. The American College of Radiology says there isn't enough evidence to recommend whole-body MRI screening for people without symptoms, risk factors or a family history, and it's concerned these scans turn up nonspecific findings that lead to unnecessary follow-up testing and expense. A scan like that feels like control, but it's probably closer to a speculative return, like a price paid for a feeling, with no evidence yet that it buys a longer life.

In wealth, most unforced errors come from cost and emotion. The basics are spending less than you earn and investing the difference on a schedule. After that, fees compound against you the same way returns compound for you. Warren Buffett bet $500,000 that a low-cost S&P 500 index fund would beat a hand-picked set of hedge funds over 10 years, and nine years in, the index fund had compounded 7.1% a year while the funds of funds averaged 2.2%. The costliest error may be selling in a panic, which locks in a temporary drop and usually leaves you out of the recovery.

Preparation doesn't entitle anyone to a good outcome. Healthy 42-year-old athletes can have fatal heart attacks, people who never smoked get lung cancer, careful drivers get hit by someone running a red light, and careful savers get laid off in recessions.

Those events are out of anyone's hands. As financial planner Carl Richards puts it, "Risk is what's left over after you think you've thought of everything." What I control is how ready I am when one hits. If I've kept up with screening, stayed strong, and kept good insurance, a diagnosis finds me in the best position to recover. If I've kept an emergency fund and stayed invested through past drops, a layoff or a crash is something I can get through.

Investors use "dry powder" for cash set aside to buy when prices fall. I use it more broadly to mean the capacity to respond. Preparation decides what a decline requires of you.

Financial dry powder is an emergency fund, a spending level below your income, and enough cash or short-term bonds that a crash never forces you to sell stocks at the bottom.

Health dry powder is broader than you might think. It's comprehensive insurance, a primary care clinician who knows you while you're healthy, the strength and fitness reserve that lets you manage bumps in the road, and people who will show up for you, from a ride to an appointment to help at home after a procedure. There's an emotional version of this, too: a view of life that allows you to make it through hard times.

With dry powder in place, the right response is often to do nothing. If my emergency fund is full and my allocation is set, a 30% drop asks nothing of me except that I don't sell, and ideally I can buy more while stocks are on sale. Rebalancing on a schedule handles the rest. It trims what got expensive and adds to what got cheap. In health, the equivalent is trusting an evidence-based screening schedule aligned with my personal and family history, getting my shingles vaccine, and saving my energy for the day a real symptom shows up.

People will keep solving problems while the list of health risks we can do something about and conditions that can be treated more effectively will keep gets longer. Every generation inherits problems the last one couldn't crack. Innovators study them, build something, run the trial, or starts the company. Knowledge compounds, capital compounds, and both reward the people who stay invested long enough to collect.

I don't need to know what happens next. Not only that, I accept that I can't. I need to arrange my life so that a foreseeable bad event can't wreck it. Then I need to stay in for the upside. That means investing through markets crashes, taking care of my body, following the science even though it can't promise I won't be dealt a bad hand, and keeping cash reserves even though that means less is invested.

Tell patients when their next screening or vaccine is due and why the interval is what it is. Then pick one habit, like weight-bearing exercise or sleep, build it into the plan of care, and ask about it at the next visit. With your own money, contribute through work at least enough to get any employer match, and automate it so it happens without a decision.

Give patients the test for settled science I use, so they can judge the next headline, supplement or whole-body scan on their own. Apply the same test to your portfolio: low-cost funds that own the whole market have the evidence behind them and make solid defaults. Stock tips usually don't.

For patients, dry powder is strength and fitness reserve going into a surgery or a diagnosis, keeping up with vaccinations and recommended preventative screenings, and a primary care clinician who already knows them. For your finances, it's a cash reserve that covers months of expenses, your insurance deductibles, and the option to invest when the stock market drops and stocks are on sale.

Agree with patients on the next screening date and what happens if a result comes back abnormal. Planning in advance reduces panic later. Do the same with your money: write down your allocation and what you'll do in a 30% market drop while markets are calm, so the decision is already made before panic can push you into one you'd regret.

Human ingenuity will keep handing us better tools for our health and new companies that grow the economy and our portfolios with it. I can't control the next unavoidable diagnosis or the next crash. My job, and yours, is to use what science has already given us, own a smart, purposefully chosen investment portfolio, keep enough cash that a crash never forces a sale, and give our health and our money time to compound.

Then repeat the mantra.

Bogle's split between investment return and speculative return, with the 1871 to 2014 numbers. Bogle JC, Nolan MW. Occam's Razor Redux: Establishing Reasonable Expectations for Financial Market Returns. October 2015. CXO Advisory summary

Buffett on why American business keeps getting more valuable, and his 10-year index fund bet. Buffett WE. Berkshire Hathaway 2016 Letter to Shareholders. February 25, 2017. Berkshire Hathaway

How often the S&P 500 falls 10% and 20%. Capital Group. Market declines: A little history. Capital Group

How often 30% and 50% declines have happened since 1928. Du Plessis K. How Often Does the Stock Market Really "Crash"? Option Alpha. January 15, 2015. Option Alpha

Where market valuations stood in mid-2026, and why CAPE can't time a decline. Spatacco A. The Stock Market Just Flashed a Warning Seen Only 5 Times Before. History Is Crystal Clear About What Happens Next (Hint: It's Not Good). The Motley Fool. August 13, 2026. The Motley Fool

The 4% of stocks behind the market's entire net gain. Bessembinder H. Do stocks outperform Treasury bills? Journal of Financial Economics. 2018:440-457. DOI

Colorectal screening intervals, years of life gained, and the share of adults not up to date. US Preventive Services Task Force. Colorectal Cancer: Screening. May 18, 2021. USPSTF

Why radiologists don't recommend whole-body MRI screening for people without symptoms. American College of Radiology. ACR Statement on Screening Total Body MRI. April 17, 2023. ACR

Carl Richards's definition of risk. Richards C. Risk is what's left over. Behavior Gap. October 11, 2021. Behavior Gap He made the same point in Which Risk Are You Managing? Morningstar Advisor. August/September 2010. Morningstar Advisor

*Disclaimer: All opinions and ideas expressed in this article are solely mine and none represent a recommendation or should be viewed as advisement of any kind to anyone to do anything.*