Fundamentally we can actually distil the forces that govern our success in investing down to 3 things:⁣⁣⁣⁣

1. Rate of appreciation.⁣
2. Inflation
3. Volatility

⁣⁣⁣⁣So, what do these mean?⁣⁣⁣

1. Rate of appreciation: This is pure and simple a function of time and increase in value. The more our assets appreciate and the shorter a timeframe over which this occurs is the greater the rate of appreciation. The higher the better, however we must counterbalance this via choosing assets with a proven history of achieving returns. The more data the better in yields a more secure track record.⁣⁣⁣
2. Inflation: This is the floodwater that is constantly rising and attempting to drown out our portfolio value. The faster this rises the more of a chance that we may find ourselves underwater. The whole idea is to choose assets that will outpace inflation or else we never actually make any profits.⁣⁣⁣
3. Volatility: Volatility has a few different academic definitions however it is in essence the amount the assets valuation varies around its mean over a given unit of time. The more volatile the asset the more we have to consider timing when extracting returns from the asset.

⁣⁣⁣The essence of investing is threefold… ⁣⁣⁣⁣The idea is to obtain the greatest rate of appreciation over the shortest amount of time minimising volatility and outpacing inflation by the greatest rate possible.

⁣⁣⁣⁣There are a few more factors to consider of course. However, understanding that there are only three main forces at play is a significant first step.⁣⁣