Will the Fed taper? Are they going to stand pat? Who will replace Bernanke? Is the market going to correct? Is the Fabulous Fab going to lose his litigation? When will the dollar collapse? What about Obamacare? How are earnings going to do this quarter? What about Gold? Are yields going to keep going higher? Will GDP print 1%? How can I make a currency bet? What will rising volatility do? Will we have a recession? How can I have higher returns but less risk? Which Hedge fund manager is the most awesome? 


Over the past month, I have seen, heard and read all of the above. They generate a lot of angst amongst investors. I do not believe any possible (honest) answer to these will bring any sort of security or comfort level to investors. Not because I expect these to play out in some terrible way — I don’t really have any foresight into how these play out.

Rather, because these are the wrong questions.

They relate to issues that are completely outside of your control. They offer a distribution of outcomes that provide nothing in terms of your longer investing timeline. You cannot trade around these, at best you can make binary bets on skimpy information along with the rest of the hot money crowd.

Personally, I don’t like those odds: Guessing as to how something will turn out and putting dollars on the line does not ooze with the sort of intelligent planning that leads to long-term, happy outcomes.

What then are the right questions to ask?

What might happen?

How can I benefit when these future events occur?

What is my plan of action if these things do happen? 

How can I prepare myself to deal with the inevitable emotional response to these events? 

What is the difference between these two sets of questions?

The first set at the top of the page are noise. They are the blather that fills the airwaves and webpages and ink on dead trees. They involve things you can neither predict nor make any sort of intelligent risk/reward decisions about. But the key is they are all things you have precisely zero control over.

The second set of questions have a very significant difference, in that they are things that in your control.

The best advice I give people is stop worrying about what you cannot control, and focus on what is within your power to effect. The rest is noise . . .



Things I Don’t Care About  (January 15th, 2013)

What Do You Control?  (May 30th, 2013)


Source: Carl Richards, BehaviorGap.com

Category: Apprenticed Investor, Investing, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “Asking the Right Questions”

  1. Lariat1 says:

    A philosophy similar to the Serenity Prayer: serenity to accept the things I cannot change, the courage to change the things I can and the WISDOM to know the difference.

  2. Hallsto says:

    I’m not sure if those circles are infinitely small, infinitely large, or some odd pairing of each. 200 years is a blink of the eye, and outside of genetic information, most of us won’t have a legacy reaching even that span of time.

    Perhaps more confounding still is the concept of control. We all like to imagine ourselves as owners of our destiny, but when it comes down to it we’re just renters, even of the chemicals that make up our very bodies. We can certainly do things, but at some point we’re very reliant on the hardware we’re given. That hardware includes everything from social infrastructure to our individual perception of our own histories. Sure there is an option tree, but control?

    Think I’ll go read some Camus.

  3. rd says:

    Other than track and manage my overall asset allocation, including the duration and quality of the bonds in it, tehre isn’t much to do.

    I have been baffled by the tooth gnashing over Bernanke’s statements over the past few weeks. QE with massive purchases of long T-bonds has been a pretty unprecedented thing to do. So has a Fed funds rate of 0%. Both of these moves have severely hurt savers and were only put in place to counter the severe economic disruptions from the financial crisis caused in part by many of the tooth gnashers.

    It has been obvious from the first day of ZIRP and QE that Bernanke would like the economy to move to the point where it doesn’t have to depend on these for life support. Tapering or cessation of T-bond purchases was clearly going to cause those interest rates to rise 0.5% to 1% because the entire purpose of the QE program was to drop them that amount. The fact that he is even considering it is a testament to how far along the hobbled economy has been able to limp along over the past 4 years.

    I expect to see a bear market in bonds sometime over the next few years. However, its peaks and valleys are unlikely to precisely coincide with the stock market peaks and valleys, so the bond market is still a valuable rebalancing tool.

  4. Greg0658 says:

    “Capitalism is the best path to prosperity” (Survive-ability)
    Still True?


    we invented CASH – we can un-invent it (it could happen) (ya right) – then get ready for the Rock Show

  5. [...] On the importance of asking the right questions.  (Big Picture) [...]

  6. [...] Asking the right questions (The Big Picture) [...]

  7. [...] http://www.ritholtz.com/blog/2013/07/asking-the-right-questions/ “The best advice I give people is stop worrying about what you cannot control, and focus on what is within your power to effect. The rest is noise . . .” Yes, stop questioning about what others can do for you. Question yourself about what YOU can do. That was my major fail yesterday. [...]