Materiality

Understanding ‘materiality’ or the degree to which an opportunity or risk event is likely to influence returns is fundamental to investment success. Here we refer to things such as:

• Not missing big gains and avoiding big losses;
• Not fixating too heavily on short term price movements at the risk of missing more substantial advances (i.e. sensitive sell trigger in an attempt to manage risk at the expense of letting longer term investment thesis play out);
• Truly thinking about and understanding the varying influence of individual portfolio weightings. Portfolio weightings should arguably reflect the degree of conviction.  
• Managing our time well. Some days are also a lot more influential than others.
• Managing the emotional response. Truly exceptional risk / reward opportunities all too often coincide with times of profound uncertainty.