When I think back on 2020—and I know we’re not quite done with it yet—I’m reminded of the movie Alexander and the Terrible, Horrible, No Good, Very Bad Day. But to paraphrase Nietzsche, chaos isn’t all bad—if something positive ultimately emerges from it. Below are five financial lessons that, in my mind, are worth carrying beyond this year:

1. Stock prices do respond to the news—but never in a predictable way. Leading up to the election, anxiety levels were running high. But in the end, even though there was a lot of noise in the political arena, the market reacted with equanimity. In fact, since election day, the S&P 500 is up about 10%. The lesson: In the ordinary course of events—even in a year with above-average political heat—stock prices care less about Washington and more about the economic fortunes of the underlying companies. Consider this: Over the past twenty years, there have been six presidential elections. How has the market reacted to them? In the month following the election, the market has risen exactly half the time, and it has fallen the other half of the time. On average, across those six elections, the reaction has been essentially a non-reaction: up 0.08%. You could have flipped a coin and gotten the same result. One observer put it well. Just before the 2020 election, he suggested this thought experiment: Suppose you’re considering buying a new phone or a new car. Will it make any difference whatsoever to that decision whether a Democrat or a Republican is sitting in the Oval Office? I think that sums it up well. As much power as presidents have, and as much emotion as they elicit, ultimately it’s corporate profits that drive stock prices.

2. Market bubbles are tricky for a lot of reasons—but mostly because no two look the same. We’re all familiar with the Dutch tulip bubble in the 1600s, the stock market mania in the Roaring Twenties and the dot-com bubble in the 1990s. With the benefit of hindsight, we recognize these episodes as collective madness. But the problem for investors is that no two bubbles look exactly the same. We’d like to think we can spot a wolf in sheep’s clothing, but wolves are very good at disguise. If someone tried today to sell you an overpriced tulip bulb or shares in an unprofitable company like Webvan, you’d spot it from a mile away. But when the price of an electric car company rises 690% inside of a year, we’re less likely to see it for what it is. That’s because it’s so easy to paint a picture about the future: Elon Musk is a genius, the narrative goes. It’s more than a car company, they’re making trucks too, and batteries and drivetrains and who knows what else. From that perspective, you’d be crazy not to invest in Tesla. It’s the same with bitcoin: If you really believe that it will replace traditional currencies, it doesn’t matter that the price has tripled this year. I don’t know when or how these bubbles will burst, but history suggests they will. The lesson: If it looks like a bubble—if the price chart looks dangerously close to vertical—then more often than not, it probably is. If you’re interested in this topic, I recommend Charles Kindleberger’s classic Manias, Panics, and Crashes: A History of Financial Crises.

3. The S&P 500 is a reasonable proxy for “the market”—but it’s not perfect. When most people talk about “the market,” they’re usually referring to the Dow Jones Industrial Average or the S&P 500. And in general, it’s reasonable to use one as shorthand for the other. The correlation between the Dow or the S&P and the overall market is close to 1.0. In other words, they move in almost perfect unison. But they’re not exactly the same, and both are incomplete. The Dow has just 30 stocks. And while the S&P 500 is more diversified, it of course, still has just 500. Meanwhile, there are thousands of publicly traded companies in the United States. And as research has shown, and as we’ve seen this year, just a small number of stocks account for a large part of the market’s gains over time, so you don’t want to miss one. The lesson: If you’re building a portfolio, be sure to cast a net that’s wider than those well known market benchmarks.

4. Wall Street people know a lot—but never enough to be useful. Wall Street is full of analysts and fund managers whose job it is to generate opinions. And while they know a lot, the events of this year highlight the reality that no one can truly know everything. This is true on a macro level, as we saw when a virus came out of nowhere and wreaked havoc on the economy. And it’s true on a micro level, as we’ve witnessed most recently when an obscure technology company called SolarWinds (SWI) turned out to have been the weak link in enabling a massive hack against U.S. government systems. Prior to this news, any analyst looking at SWI would have seen a strong, growing business. Revenue had more than doubled over the past five years, and the stock had been flying, up 27% this year. But no one—other than the hackers—knew about this risk below the surface. As a result of this unpleasant surprise, when the hack was revealed, the stock fell 40% almost overnight. The lesson: I often feel like a broken record when I say that no one has a crystal ball. But it bears repeating. Whether it’s a virus or a hack or any other unexpected event, the only thing you can count on is that unexpected things will continue to happen. The lesson: If you want to listen to forecasters, that’s fine, but recognize that it’s largely just info-tainment and doesn’t contain the information you’d really want to know.

5. Once-in-a-blue-moon events should be rare—but occur pretty frequently. In his book When Genius Failed, Roger Lowenstein chronicles the blow-up of the hedge fund Long-Term Capital Management. How did a group of geniuses, including two Nobel Prize winners, fail so spectacularly? Long-Term Capital had built its trading strategy on a set of carefully-researched statistical assumptions. But, Lowenstein writes, “They had forgotten the human factor.” They ignored the reality that market behavior doesn’t fit neatly into standard statistical models. Extreme price movements occur much more frequently than the normal distribution would predict. The lesson: When you’re building a portfolio, you should build in plenty of margin for error. Spreadsheets can only take you so far. But since they can’t predict viruses or hacks or anything else, it’s okay to be—and indeed you probably want to be—more conservative than the numbers would suggest.