There Are Only Two Ways To Become A Better Investor
Most investors spend their entire lives trying to make better decisions.
They read more books.
Study more charts.
Follow more experts.
Analyze more data.
The objective is simple:
Make better investment decisions.
There is nothing wrong with this approach.
But there is another path that many investors overlook.
You can either:
- Make better decisions.
- Make more decisions.
Understanding the difference changed the way I think about investing.
The Formula Behind The Idea
In portfolio management, there is a well-known relationship:
Information Ratio = Skill × Breadth
You do not need to understand the mathematics behind the formula to understand its message.
The formula says that investment performance comes from two sources:
- The quality of your decisions.
- The number of opportunities you have to apply that skill.
I prefer to think about it in plain English.
Better decisions.
Or more decisions.
My First Investing Framework
In the early years of my investing journey, I focused almost entirely on making a few high-conviction decisions.
One example was my investment in GAS after oil prices experienced a significant decline.
I spent time studying the industry.
I built a thesis.
I developed strong conviction.
The entire outcome depended on a relatively small number of decisions.
This approach has one attractive feature.
If you are right, the rewards can be significant.
It also has one major weakness.
If you are wrong, there are very few opportunities to recover.
Your results become heavily dependent on a handful of large bets.
What Changed
Over time, my thinking evolved.
Trading, options, and even poker exposed me to a different framework.
I became less interested in finding a few perfect opportunities.
I became more interested in creating a process that could be repeated consistently.
Instead of asking:
How can I make this one investment work?
I started asking:
How can I make hundreds of decisions with a small edge?
This shift fundamentally changed my approach.
Poker players understand this naturally.
The objective is not to win every hand.
The objective is to make enough good decisions over a large number of hands.
The same principle applies to investing.
Two Paths
Every investor eventually chooses one of two paths.
Path One: Increase Decision Quality.
This path focuses on research, analysis, expertise, and insight.
The goal is to improve the accuracy of each decision.
Many successful value investors follow this approach.
Path Two: Increase Breadth.
This path focuses on process, repetition, and scale.
The goal is to apply a small edge across many independent opportunities.
Many systematic traders and option sellers follow this approach.
Neither path is inherently superior.
The important thing is understanding which game you are playing.
The Question Most Investors Never Ask
Most investors spend years searching for better opportunities.
Very few stop to ask:
Am I trying to improve my decisions, or increase the number of decisions I make?
The answer influences everything.
Your strategy.
Your process.
Your portfolio construction.
Even your expectations.
An investor making five decisions per year needs a very different framework from an investor making five hundred decisions per year.
Reader Exercise
Think about your own investing approach.
Which description sounds more like you?
A. I make a small number of high-conviction decisions.
B. I make a large number of repeatable decisions with a small edge.
C. I am trying to combine both.
There is no universally correct answer.
But understanding your answer may help you understand your investment process more clearly.
Final Thought
One of the biggest changes in my own investing journey was realizing that performance does not come from a single source.
It comes from a combination of decision quality and decision frequency.
Some investors win through exceptional insight.
Others win through disciplined repetition.
Most successful investors eventually develop a balance between the two.
The important question is not which path is better.
The important question is whether you know which path you are currently following.