It may be helpful to compare the creation of an outstanding investment portfolio to the making of a delicious stew. The two primary ways to create a stew that stands out relative to all other stews are:

Option A: Use a different recipe, with different proportions of ingredients than other stew-makers

Option B: Use superior ingredients – better potatoes, better spices, better meats, etc.

Of these two approaches, Option A has much higher potential to lead to a differentiated stew than Option B. There is always wide latitude to adjust the recipe. In contrast, differences in ingredients, for instance one type of potatoes vs another, will be more subtle.

Read entire publication: Improving the Endowment Model

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