Evolution conditions us to look for confirmation of previously held beliefs and to try to find data supporting ideas already in our head. Back in the '60s, “The Lovin’ Spoonful” hit the charts with “Do You Believe in Magic?” but their later tune, “Nashville Cats,” pointed out country music pickers were better than folkies and rockers who likely spurred Nashville and Memphis music.

Psychologists call it information avoidance when someone tunes out information that makes them feel uncomfortable or challenges previously held beliefs.

In the investing world, we blind ourselves to the obvious as well. The current bull market has been kicking along for over eight years, and investors’ anxiety as measured by the CBOE index (VIX) has not been this low since early in Bill Clinton’s first term. According to a recent survey, individual investors expected their portfolios to earn close to 10 percent. With the 10 year Treasury note yielding around 2.5 percent, a balanced stock and bond portfolio would need the stock component to earn around 15 percent. Hedge fund investors, per a recent study, expect even higher returns, 20 percent plus despite the fact hedge funds have underperformed stocks for most of the 21st century.

What returns should we expect? The yield on the 10-year US Treasury note is around 2.5 percent, and we will assume that is a proxy for bond returns. Stocks have historically returned 4-5 percent more than bonds but with much greater volatility. Disclosure: Stocks have underperformed bonds for extended periods. Based on current bond yields, a balanced portfolio should return mid-single digits. Don’t take my word. Elizabeth Mitchell, a well-known professor at the Wharton School of Business, predicts lower returns that last much longer than many expect. Bond fund leader PIMCO expects muted stock returns hovering around 5 percent. Bill Bernstein, my investing hero, expects lower market returns as well. Once you know Bill Bernstein’s opinion, there may be another one, but it is likely wrong.

The investing tooth fairy does not exist. Don’t expect Big Rock Candy Mountain — it lives only in a bluegrass song. Investment returns will never overcome any unwillingness to save and explains why people expect high yields. The best way to prepare is either work longer, save more or spend less. Take your pick; you can choose one of the three or combine them any way you like.

For those who are giddy over investments since 2009, I have two words for you, mean reversion. History may not repeat itself, but it often rhymes, and market returns revert to historical averages. Bad things are not obvious when times are good either. Let me close from Warren Buffett’s 2004 letter to shareholders, “You only find out who is swimming naked when the tide goes out.”

You can’t always get what you want, but Buz Livingston, CFP can help figure out what you need. For specific recommendations, visit livingstonfinancial.net or come by the office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.