What Actually Drives Long-Term Investment Returns? Process vs Stock Picking

A lot of investing discussions focus on finding the “right stock,” but over time I’ve found that long-term results depend more on process than picks.

Here are a few principles that seem to matter most:

1) Asset allocation > stock selection
How you divide money between equities, bonds, and regions often explains more of your results than individual picks.

2) Compounding beats timing
Missing strong market years usually hurts more than avoiding downturns helps.

3) Risk management protects returns
Over-leverage, concentration, and emotional decisions can undo years of gains.

4) Behavior > strategy
Even good strategies fail if investors panic, chase trends, or abandon plans.

5) Valuation matters long term
Buying great businesses at unreasonable prices often leads to mediocre returns.