In most areas of life putting in more effort means achieving a better outcome.
The harder and more consistently you exercise, the fitter you get. The more hours you put in studying, the better your grades.
Of course there are a few, very unusual areas where the opposite rule holds. Aldous Huxley’s called this “The Law of Reversed Effort”: the harder you try, the worse you do. Think of quicksand and finger-cuffs, where success is defined by gentle, slow movements. Continue reading The Law of Reversed Effort
Investors usually understand returns.
But risk… risk is more difficult. Risk involves communicating not just that many outcomes are possible, but how likely they are. Continue reading Visualizing risk, return, and time
Aside: This post is a response to Corey Hoffstein’s question: “Do you believe that behavioral biases exhibited by investors can be explicitly addressed through portfolio design?”
No investor is born perfect.
The first step is admitting it, which isn’t easy.
The second step is figuring out what you’re going to do about it. Continue reading Change the portfolio, or change the investor