The Critical Importance of Process Over Outcomes in Investing – Validea’s Guru Investor Blog
Investors always focus on outcomes when evaluating their success. But that approach has a major flaw. If that outcome wasn’t generated by a sound process, then it is likely the result of luck and also likely won’t be repeatable.
Consider two contrasting scenarios that perfectly illustrate a crucial lesson for investors. The first involves a day trader who experienced remarkable success during the cryptocurrency boom of 2017. Over several months, this trader generated impressive returns by following social media trends and timing market sentiment. Their approach involved monitoring Twitter activity, following popular crypto influencers, and making quick trades based on perceived market momentum. The short-term results were…
