So much of life comes down to figuring out what we can control and what we can’t. Investing is no different.

You can’t control the daily and weekly price swings of the stocks and funds you own. Hear me when I say that no amount of refreshing your brokerage app will change them. But you can control what you invest in. And you can stay aware of where a country is in its economic cycle at any given time.

People often ask me how I make my buy and sell decisions—the reasoning behind the trade emails you receive. Why am I investing in what I’m investing in, and why now? So here is my framework, start to finish.

Let’s dive in.

I don’t invest my money in anything I don’t want to support. For me, that rules out oil and gas. It also rules out soul-sucking social media companies like Meta.

Instead, I like to focus on companies doing great things for the planet: clean food, clean air, clean water, closed-loop manufacturing. I also look for companies doing great things for people. That includes technology that makes our lives easier, frees up space, and helps us have more personal autonomy, so we can become more fully ourselves.

Your values may look different from mine, and that’s exactly as it should be. The point is that your portfolio is a place where you get to vote your values.

As you’ve probably heard me say, any given country at any given time can really only be in one of four fundamental economic environments:

You might guess that stagflation is the worst of the four. But for stocks and other growth investments, the fourth scenario—slowdown—is actually the most dramatic. It’s what we saw in 2008, before the Federal Reserve stepped in and started printing money to kick-start the economy. And whatever you think of those interventions, it pays to know which economic season a country is in.

So when it comes to building a portfolio, I step back and think, “Okay. I have this pot of money, my hard-earned life savings. How should I divvy it up?” Big picture, I think it’s important to hold some assets that have historically done well in each economic environment. Gold has tended to shine during stagflation. Bonds have tended to shine in deflationary crashes. And stocks have tended to shine when the economy is growing.

That’s why I keep a core, evergreen allocation to gold, bonds, and stocks. No matter which season we’re in, something in the portfolio is built for it.

In the U.S., the investing world is split into two camps: the passive camp and the active camp. The passive camp, born with the first index funds in the 1970s, now dominates the discussion. If you search “How should I invest my money?”, whether in a book, on Google, or with AI, the most likely answer is to buy a broadly diversified, low-cost index fund that tracks the market. In other words, own a fund that owns a little bit of just about every public company out there.

Passive investing is popular for good reason. First, it’s simple. You don’t have to pick stocks, analyze companies, or think about timing. You buy the fund and hold on. Then don’t sell, don’t trade, don’t touch it.

It also has deep academic roots. In the 1960s, University of Chicago economist Eugene Fama (who later won the Nobel Prize in economics) developed the efficient market hypothesis. His theory is that all available information is already priced into the market, so anyone trying to beat it is on a fool’s errand. Whether the theory holds up is still debated. But there is plenty of evidence that frequent trading erodes returns, and that most professional active managers underperform passive index funds over the long term.

Bottom line: the case for passive investing is strong. It’s cheap, it’s easy, and it may well be one of the best ways to get good returns.

That said, purely passive investing has three drawbacks.