Don’t Care

March 05, 2019 by Gabe | [mmd] |

While I'm not really an investor, I enjoyed this piece by Morgan Housel because "caring" can be overweighted in decision making.

There are some good nuggets in this short article, even if they aren't true or even supported by data.

Some problems can never be solved because the world they live in is always adapting and changing. Portfolio construction is one of them. Incredible amounts of effort are devoted to finding the optimal level of diversification and position sizing. There are critical elements to both. But some level of “good enough” can be ideal for most people. The factors that determine future returns are still out of your control no matter how many spreadsheet tabs your model uses, and when you let go of caring about having a perfect portfolio you have fewer knobs to fiddle with, which reduces the chances of regrettable decisions. A rule of thumb is to prefer the strategy that’s likely to get you closest to your goal with the fewest number of decisions needed along the way.

I can't verify most of the statements in the article and I really have no cultural context for the opening reference. But I do know that a lot of bad decisions I've made in my life had to do with caring a lot about the results.