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"Your Process Matters More Than Your Outcome"-"The hard is what makes it great!"

| October 17, 2020

Investing, like baseball,  is different.

"The variance in outcomes due to luck is enormous even when you think it shouldn't be."

"Baseball, like many things in life (including investing), involves both luck and skill. In such endeavors, outcomes can’t be controlled. The variance in outcomes due to luck is enormous, even when you think it shouldn't be. That’s why your process matters more than the outcome."  Source: Bob Seawright

As Bob Seawright wrote about the Giants and Padres final game:

"A Giants win over San Diego would put them in the postseason; a loss and they were out ... "

"It didn’t go well for the Giants ... "

"Home plate umpire Rob Drake had an inconsistent strike zone all game long and rung up Slater on a 100 MPH fastball that should not have been called a strike ... "

"Austin Slater didn’t do anything wrong and his team’s season ended anyway. He simply was a victim of a bad call, bad timing, and very bad luck."

Source: Bob Seawright

From A League of their own - for less than 2 minutes of video, I think well worth it.

TOM HANKS talking to Geena Davis

"... quitting. You'll regret it for the rest of your life.  "Baseball is what gets inside you. It lights you up. You can't deny that."


"It just got too hard."

TOM HANKS after walking away, then turns around:

"It's supposed to be hard. If it wasn't hard everyone would do it. The hard is what makes it great."

Briefly continuing with the baseball analogy, the batting champions in 2019 per NBC Sports batted .335 and .329 respectively. Said differently, approximately 2/3 of the time, they failed to hit safely. And these were the best hitters in each league. And these are professional baseball players at the top of the pyramid. Hitting is HARD!

Switching sub-topics abruptly to my previously quoted link from Stanford GSB (Graduate School of Business)

I re-read the article again from some time ago, and something jumped out at me:

"It's possible that neither investors nor mutual fund managers have been as foolish as they have been portrayed."

"The research revealed another intriguing result: The mutual fund manager’s current compensation from aggregate fees and the value he or she added to the fund predicted the fund’s future returns even better than past value added. That suggests that investors pick up on tiny signals in the market to evaluate the potential for managers to outperform in the future. It's possible that neither investors nor mutual fund managers have been as foolish as they have been portrayed.

Now going all the way back to the original point about process, IMPO In My Professional Opinion there is plenty of room for both "flavors," index aka passive as well as actively managed. They can and do co-exist IRL In real life and in my own work.

But, circling around, how does one choose? Answer: Process. I haven't detailed in this post what Bob Seawright wrote his edition of The Better Letter (linked below.) He actually listed many of his views.

Watch this space in the future for some more of my own thoughts on this topic. And, in closing, to paraphrase Tom Hanks:

Investing is Hard. That what makes successful investing great. If it weren't hard, everyone would be GaZillionaires!

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