All too often we encounter a scenario seemingly so straightforward, observe another who makes something appear so natural, or judge a problem appearing to have an obvious solution. As it applies to investment management, we achieve or learn of others realizing superior returns in what feels or appears effortless. However, our perception deceives us, as we fail to recognize all relevant factors. The popular Morgan Housel from Collaborative Fund dives into this topic in his recent piece “Different Kinds of Easy” as he buckets six scenarios providing a perception of “easy”.

Of the six clusters, there are two of note. The first focuses on the delay between costs and benefits, as Housel uses the example of exercise – immediate discomfort following by eventual positive results derived from physical activity. Applied to investing, the benefits of prudent investment efforts and process may take years to yield tangible results; hence diminishing the reasonably-timed feedback loop to confirm the worthiness of the costs. Conversely, rapid feedback conditions investors for quick gains, as seen in events like investment bubbles. The second bucket Housel labels is underestimating the contribution of supporting factors to one’s success. The piece references a Harvard study of Wall Street analysts unable to maintain historical success upon switching shops, illustrating the necessity of competent auxiliary people and components enabling the central figure being individually credited with the collective success.

While our perception can swiftly convince us of the effortlessness, ease, and simplicity of tasks, decisions, and achieving excellence, rarely is that the case. The combination of refined processes, patience, collaboration, and a broad perspective are all arguably necessary conditions to achieving what partial informed observers will miss and conversely populate with a perception of ease.