Investors often focus their time on things that are out of their control rather than focusing on things they can control. Seth Klarman, the founder of Baupost, describes what cannot be controlled in investing. The following is an excerpt from the 2005 fund letter:
“For most investments, much can go wrong, including numerous factors beyond an investor’s control: the economy, the markets, interest rates, the dollar, war, politics, tax rates, new technology, labor problems, competition, litigation, natural disasters, fraud, dilution, accounting gimmicks, and corporate mismanagement.” – Seth Klarman, 2005
Success for investors will be earned in controlling the controllable elements while attempting, when possible, to minimize uncontrollable events. The following are a few examples of elements investors should focus on controlling: investment time horizon, proper temperament with volatility, low fees, staying diversified, appropriate savings rate, and proper asset allocation.
