Many investors spend way too much time focusing on factors outside of their control. I count myself among the misguided. Though to a lesser extent than when I started. I’ve succeeded in modifying my mindset in many ways. I could probably do better. Today’s blog is going to help me. Maybe it will help you too.

Let’s start with what’s in my (and, by extension, your) control:

One: My savings rate.

Two: My portfolio allocation.

Three: Whether I have a financial plan or not.

Four: My trading rules

Five: My position sizing (e.g., how much money I place in each investment/system/bet)

Sixth and BIGGEST: My behavior – do I follow my plan or not? Do I obey my rules or not?

I’ll have more to say on each, but let’s first contrast this list with one of the things that are OUTSIDE OF my control:

One: Fed policy and the future path of interest rates.

Two: Whether the economy enters a recession or not.

Three: The outcome of the debt ceiling drama.

Four: The next presidential election.

Five: Whether inflation returns with a vengeance or continues to recede.

Six: Which asset class performs best this year and each year thereafter.

Seven: The stock market’s rate of growth.

Eight: A million other economic, monetary, fiscal, and market-related factors.

Part of growing up as a trader is becoming more comfortable with uncertainty. Since it’s inescapable, why not embrace it? A second part of the maturing process is turning your time and attention to the things that are in your control.

I like to speculate and geek out on the second list, sure, but my success hardly hinges on it. And that’s a good thing because I don’t have much of an edge there. Predicting the future is hard. The older I get, the more boring investing has become. I think that’s a good thing too. It’s born of confidence and an intimate knowledge of my process. It’s born of experience and witnessing the outcome of lots and lots of trades. Do less of what doesn’t work over time and more of what does work, and pretty soon, you’re left with the highest confidence/most probable systems. You know, the ones you can stick with because you have the utmost faith in the long-term outcomes.

Questions to Consider

Now, let’s elaborate on the first six things in my control:

One: Savings rate. When your portfolio is smaller, increasing your savings rate has a much bigger impact than juicing your return. Say you have a $20k account and make a 10% return, or $2k. And you make $80k at your job. Is it easier to double your return from 10% to 20% or save another $2k (2.5% of your income) for the year?

Two: Portfolio allocation. Do I own the right assets? Has the mix of investments/systems I use generated the types of returns that I need to reach my goals? If you need higher rates of return and desire wealth-building, then equities are where it’s at.

Three: Do I have a plan? Both a holistic financial plan and an investment plan for what I own and why? If followed, will this map guide me to my desired destination?

Four: Do you have rules that guide your decision-making on each investment/trade? Have you fully embraced the powerful concept of planning your trade and trading your plan?

Five: Have you optimized your position sizing to eliminate the risk of ruin? You are in complete control over how much pain is inflicted and pleasure granted with each trade.

Six: Do you have self-control? Do you do what you said you were going to do? Have you mastered yourself? The market is an expensive place to learn who you are and how much discipline you may or may not have.

These are the additional questions that come to mind when considering what’s in your control. Making you think correctly about investing may now seem as exciting as sharing my favorite trade idea, but it will make a bigger impact on your returns.

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