Optimization is a scourge.
I say this as someone who is as addicted to efficiency as anyone I know. I have a chart - not a mental chart, but an actual on-paper chart - of which of the three specific routes I should take to my office by day and time. I almost never schedule same-day meetings because I find it disruptive to planned periods of work on certain projects. I set up a mise en place for making Kraft Mac & Cheese for my kids, for God's sake. My biggest average allocation to public markets in non-taxable accounts for several years has been to risk parity. Much of the rest has sat in systematic trend-following and behavioral premia strategies. I am an optimizer, y'all.
Yet I have also spent my career as an allocator to investment strategies observing what both explicit and implicit goal-seeking does to investors and their processes.
The first thing you need to do to succeed in Corporate America is when you are given your “goals” or “objectives” for the year is to figure out which one (usually it’s one) matters and which ones you just need to wave your hands at. Whether you are just out of college or running several businesses, figure out what really, truly matters to your boss - do that - and smartly wave your hands at the others and you’ll go far.
Triple +1 Mark. College students please take good heed of this great advice. Corporates are so awash of doublespeak and secondary objectives. To swim you need to crack the truly important thing that needs to be got right. Investment professionals have to work out what benchmark really matters when clients give a mix of objectives (beat inflation, not lose money, good returns).
Continue the discussion at the Epsilon Theory Forum