Sunday, September 22, 2024

What you can and cannot control in finance


You cannot control:

Markets  - what markets will do

Outcomes - the outcomes from your actions

Returns - The returns you will receive

You can control:

Your behavior relative to the markets 

The process you use for making decisions 

The amount of diversification you want

One of the most important investment lessons for either a discretionary or quant investor is knowing what you can control and what is out of your control. You may form expectations and forecasts  that you may think you control, but the end result is still out of your control. The focus has to always be on the process. If you have a better process, you will have better outcomes. 

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