I. Volatility is the "Fee," Not the "Fine"

Most people view a 10% drop in their portfolio as a signal that they’ve done something wrong (a "fine"). In reality, volatility is simply the "price of admission" for the superior returns of the stock market.

• Market Corrections: Historically, the S&P 500 drops 10% or more roughly once every year.

• Bear Markets: A 20% drop happens roughly every 3.5 years. If you can't stomach the sight of red numbers for a few months, you aren't ready for the rewards of the next decade.

II. "Don't Just Do Something, Stand There"

In most areas of life, if there is a crisis, you should take action. In investing, the opposite is often true.

The greatest threat to your wealth is your own Behavioral Gap—the difference between what an investment returns and what the investor actually earns because they bought high (greed) and sold low (fear).

The 20-Year Rule: Between 2002 and 2022, the S&P 500 returned about 9.6% annually. If you missed just the 10 best days in those 20 years because you were sitting on the sidelines in fear, your return dropped to 5.6%. If you missed the best 30 days, your return was zero.

III. The Maintenance Routine: Rebalancing

If your "Core Strategy" (Article 4) was to have 80% Stocks and 20% Bonds, a great year in the market might push you to 90% Stocks. You are now "over-exposed" to risk.

Rebalancing is the disciplined act of selling a bit of what has grown too much (Sell High) and buying what has lagged behind (Buy Low).

• The Schedule: Check your portfolio once or twice a year (e.g., every January 1st and July 1st).

• The Threshold: If an asset class is more than 5% away from your target, move the money back to the center.

IV. When Should You Actually Sell?

"Buy and Hold" doesn't mean "Buy and Ignore." There are three valid reasons to sell a stock or fund:

1. The Thesis is Broken: You bought a company because they dominated the market, but a new competitor just made their product obsolete.

2. The Goal is Reached: You are 6 months away from buying your house or retiring, and you need to move the "Fortress" into cash to protect it.

3. Rebalancing: As discussed above, you are trimming the winners to keep your risk in check.

4. Tax-Loss Harvesting: Selling a "loser" to offset the taxes you owe on your "winners" (see the Encyclopedia entry on Tax Strategy).

V. Strategic Buying: DCA vs. Lump Sum

How do you add new money to the engine?

• Dollar Cost Averaging (DCA): Investing $500 every single month regardless of price. This "smooths out" the volatility. When prices are high, your $500 buys fewer shares. When prices crash, your $500 buys more shares.

• Lump Sum: Investing $10,000 all at once. Statistically, because markets go up 75% of the time, putting your money to work immediately beats DCA about 66% of the time. However, DCA is often better for your mental health.

VI. Final Summary: Your Investor's Oath

To conclude this series, every "Fortress" builder should commit to these three rules:

1. I will not check my portfolio every day. (Check it quarterly).

2. I will automate my contributions. (Let the machine work for you).

3. I will stay the course. (When others are fearful, I will be disciplined).

Conclusion

You have completed the "How to Start Investing" series. You’ve moved from a consumer to an owner, built your infrastructure, learned the language, and mastered the execution.

The "Engine" is now running. Your only job now is to keep it fueled and stay in the driver's seat.