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Chapter 7. Decision-Making > Process v. Outcome

Process v. Outcome

The decision making process is just that—a process. You can’t make decisions based on what you want the outcome to be. Michael Mauboussin and Kristen Bartholdson of Credit Suisse First Boston present a compelling argument for “process”:

“In too many cases, investors dwell solely on outcomes without appropriate consideration of process. The focus on results is to some degree understandable. Results—the bottom line—are what ultimately matter. And results are typically easier to assess and more objective than evaluating processes. But investors often make the critical mistake of assuming that good outcomes are the result of a good process and that bad outcomes imply a bad process. In contrast, the best long-term performers in any probabilistic field—such as investing, sports team management, and pari-mutuel betting—all emphasize process over outcome.”[23]


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