What Are The Controllables Here?
We’re emphasizing the knowable by predicting how certain people and companies will swim against the current. We’re not predicting the fluctuation in the current — Charlie Munger
It pays to know in each situation what the controllable factors are. What exactly is within your control? What is actually knowable?
Within the realm of investing, this is a question which Buffett and Munger constantly assess. Anything that’s not controllable or knowable is a waste of time and energy to think about. It goes into the “too hard pile”. That includes trying to predict what the economy is going to do, despite the fact that many pundits do it without much success. It also includes companies that are too hard to evaluate. The opportunity to cost in trying to assess those is high and better to stick with companies that fall within their core expertise.
In each situation you’re considering, identify what the controllable factors are. There’s no point thinking or worrying about things that fall outside of your control. If it’s not knowable, it doesn’t really matter and not worth consideration.
You know with certainty that you can workout at the gym and that can alter your state of mind. That’s within your control. You don’t know when you’ll die. That’s outside of your control (for now). You can control how much money you make. You don’t know how tax rates will change. That’s outside of your control.
Ask Yourself, What Are The Controllables Here? to figure out the controllables and concentrate on that.
