77 - What is the source of your investment return?

Mental Models discussed in this podcast: Mean Reversion Inertia Reinvestment Rate Return on Incremental Invested Capital (ROIIC) Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Support the Podcast on Patreon This is a podcast supported by listeners like you. If you'd like to support this podcast and help me to continue creating great investing content, please consider becoming a Patron at DIYInvesting.org/Patron. You can find out more information by listening to episode 11 of this podcast. Show Outline The full show notes for this episode are available at https://www.diyinvesting.org/Episode77 Source of Investment Return Investments, as opposed to speculations or gambling, is a method of seeking returns while protecting principal. Therefore, it is critical to understand the source of your investment returns. You are not entitled to investment returns. You don't have a God-given right to earn an excess return on your investments.  So what is the source of your returns? Hint: It will vary by the type of investor you are.  Examples:  Mean Reversion Net-Net Investors Value Investors Inertia Momentum Investors Future Business Performance Quality Investors Low Reinvestment Rate High Return on Incremental invested capital Growth Investors High Reinvestment Rate (often 100%) Low-Medium return on incremental invested capital No dividends Dividend Growth Investors Low-Medium Reinvestment Rate Stable return on incremental invested capital