Some people think they don't have an investment process. Others claim they don't need one. The loudest voices on social media insist that outcomes are all that matter, as if repeatability were optional. But if you've ever wondered why some investors consistently outperform while others flame out after a hot streak, the answer isn't just pattern recognition or experience. It's having a systematic framework for converting patterns into profits while controlling downside.
Pattern recognition without process is a recipe for disaster. You can spot every setup correctly and still blow up if you don't have systematic rules for sizing, structuring, and managing positions. The graveyard of failed investors is full of people who could see the patterns but couldn't systematically profit from them.
Everyone has a process. The question isn't whether you have one, but whether you're honest about it, whether it's sophisticated enough to bridge the gap between recognition and execution, and whether it's adaptive enough to survive regime changes while keeping you in the game.
Your process might be conscious and deliberate, or it might be unconscious and driven by external forces. It might be sophisticated or simple; systematic doesn't mean complex, it means repeatable and intentional. The Twitter algorithm curating your information flow is a process. The fear that makes you sell at the bottom is a process. The FOMO that drives your buying decisions is a process. The sophisticated investor doesn't operate without process, they attempt to operate with process they control rather than process that controls them.
The Fatal Flaw of Pattern Recognition Alone
Here's what kills more investors than bad stock picks: having great pattern recognition but no systematic process for acting on it. You see the setup. You recognize the opportunity. You think you've cracked the code. But you have no framework for sizing the position appropriately relative to your conviction and the risk, structuring the trade to limit downside while maximizing upside, setting stop losses (or mental stop losses that alerts you to re-underwrite your prior assumptions) based on the thesis breaking versus normal market volatility, managing the position as it moves against you initially, knowing when you're wrong versus when you're early, or scaling out as the trade works versus letting it run.
So you end up with the classic blow-up scenario: "I was right about the pattern, but I sized it wrong, structured it wrong, held too long, didn't have an exit plan." The pattern recognition was perfect. The process was nonexistent.
This is why experience alone doesn't guarantee success. Experienced investors who blow up usually have the same story: they could see the opportunities, they knew the market, they had great instincts. But they didn't have systematic rules for converting those insights into risk-adjusted returns.
The really insidious part is that pattern recognition can give you false confidence. You think, "I've seen this movie before, I know how it ends." But markets are fractal. Similar patterns can have wildly different outcomes based on context, timing, liquidity, positioning, and regime. The 2000 tech crash looked like 1987 until it didn't. The 2008 housing crisis looked like the S&L crisis until it didn't.
Pattern recognition gets you to the starting line. Process gets you to the finish line alive.
The Anatomy of Process
Process isn't just pattern recognition elevated to unconscious competence. It's a systematic framework with distinct components that work together to convert market insights into sustainable returns.
Think of it as a flow chart with decision trees at critical junctures. At some steps, you have hard and fast rules: never risk more than 2% of the portfolio on a single idea (risk of loss, not risk of fraud). At other steps, you have softer guidelines that trigger alerts: when correlation across top 10 positions exceeds 0.7, review concentration risk. Some parts are written down and marketed to allocators. Other parts are internalized and never discussed.
The process has multiple layers that flow from idea generation through final execution and risk management, and it's all circular. First comes idea generation and screening (I call this sourcing and origination in my own process), where you might rank order the opportunity set against itself and your current portfolio. Pattern recognition and experience matter most here. You're filtering the universe of opportunities down to a manageable set. Your edge here might be superior information flow, better analytical frameworks, or faster recognition of emerging themes. Perhaps you just know the sector or catalyst type like spinoffs or something as simple as index additions / deletions.
Next comes evaluation and underwriting, where systematic analysis takes over. You have checklists for evaluating management teams, competitive positioning, financial metrics, and risk factors. You have models for valuation and scenario analysis. You have decision trees for determining whether an idea meets your criteria. Many sophisticated investors use frameworks like 'what do you have to believe' (WDYHTB) to stress test their thesis. They systematically identify the key assumptions that must hold true for the investment to work. Critics dismiss this as marketing for pitch decks and investor presentations. Maybe it is. But even if it started as marketing, it forces analysts and PMs to think more rigorously about their assumptions. It makes implicit beliefs explicit. It creates systematic approaches to evaluating risk. That's process, whether they call it that or not. Maybe you use your mentor's checklist and have expanded it. Or perhaps you found the old Julian Robertson Tiger Investment checklist and now utilize parts of that.
Then comes position sizing and trade structure, where process becomes crucial for survival. You have rules for how much capital to allocate based on conviction level, risk/reward ratio, time to catalyst, and portfolio impact. You have frameworks for structuring trades to limit downside while participating in upside. Perhaps you use an off the shelf product for trade structuring.
Risk management and portfolio construction follow. I view these as related but separate. You have systematic approaches for monitoring correlation, concentration, and liquidity. You have protocols for when to reduce risk, when to hedge, and when to take profits.
Finally comes exit strategy and position management, where process determines whether you actually capture the returns you identify. You have rules for trimming winners, cutting losers, and managing positions as they evolve. You have frameworks for distinguishing between noise and signal when positions move against you and increasing and reducing net and gross exposures.
The sophisticated investors aren't the ones with the best pattern recognition. They're the ones with the best systems for converting patterns into risk-adjusted returns while surviving the inevitable mistakes and regime changes. These don't have to be sophisticated systems.
Patterns vs. Parallels: The Critical Distinction
Most investors confuse patterns with parallels, and this confusion kills more careers than bad stock picks. A pattern is a recurring structure or behavior that has predictive value. A parallel is a superficial similarity that feels meaningful but may not be.
The 2008 financial crisis looked like the S&L crisis in some ways: real estate, leverage, regulatory failure, widespread bank failures. But treating them as the same pattern would have been disastrous. The scale, the interconnectedness, the global nature, the derivative complexity weren't just differences in magnitude. They were structural differences that made the parallel meaningless for investment purposes.
Consider how many investors in 2020 said "this is just like 1987" or "this is just like 2008." They were seeing parallels: stock market crashes, fear, volatility. But they were missing the patterns that actually mattered. The policy response, the nature of the crisis, the fiscal and monetary backdrop, the sector impacts were completely different. The investors who survived and thrived were the ones who could distinguish between superficial similarities and meaningful patterns.
Real patterns have underlying structural drivers that repeat across different contexts. The pattern of central bank policy mistakes leading to asset bubbles and subsequent busts. The pattern of regulatory capture leading to moral hazard and systemic risk. The pattern of leverage amplifying both upside and downside in predictable ways. These patterns transcend specific time periods and market conditions because they're rooted in human behavior and institutional dynamics.
Parallels are seductive because they provide the illusion of understanding without the work of analysis. They let you feel smart without actually thinking systematically. They're the investment equivalent of fortune cookies: they sound profound but don't actually help you make better decisions.
The best investors develop systematic frameworks for distinguishing patterns from parallels. They ask: what are the underlying drivers? What are the structural similarities? What are the meaningful differences? What would have to be true for this comparison to be actionable? They don't just look for what's similar. They look for what's systematically similar in ways that matter for investment outcomes.
This is where process becomes crucial. Pattern recognition without systematic frameworks for evaluating patterns leads to false confidence and dangerous parallels. You need structured approaches for testing whether what you're seeing is signal or noise, whether it's a meaningful pattern or a superficial similarity.
This principle extends far beyond investing. Every field where performance matters shows the same dynamic: true excellence requires systematic approaches, even when the practitioners claim to be purely intuitive.
Process Across All Domains of Excellence
The debate about process isn't unique to investing. It plays out in every field where performance matters, and the pattern is always the same: the best performers have highly developed processes that enable their excellence, even when they claim to be purely intuitive.
Consider Michael Jordan, who cultivated an image of pure competitive fire and natural talent. But Jordan's process was legendary among those who worked with him. His pregame routines were nearly identical every time but evolved from season to season. His practice habits were systematic and relentless. His preparation for opponents was methodical. He studied film obsessively, identified specific weaknesses to exploit, and practiced the same moves thousands of times until they became automatic. His "clutch gene" wasn't magic; it was the result of systematically preparing for high-pressure situations until his response became unconscious.
Stephen Curry revolutionized basketball with what looks like pure shooting instinct, but his process is extraordinarily sophisticated. His shooting mechanics are precisely calibrated and endlessly refined. His practice routines are systematic, progressive, and measurable. He doesn't just shoot around, he has specific drills for different game situations, different fatigue levels, different defensive pressures. His "unlimited range" isn't natural talent, it's the result of systematic practice that pushed the boundaries of what was considered possible.
Those who mock process love to point to these athletes as examples of "natural talent" or genetic freaks overcoming systematic thinking. But they're missing the point entirely. The greatest athletes are the most systematic, not the least. They've developed processes so repeatable, simple yet sophisticated that they look effortless.
Consider Albert Einstein, who's often portrayed as the archetype of pure genius having sudden insights. But Einstein's process was methodical and systematic. His thought experiments weren't random bursts of creativity; they were structured approaches to complex problems. He would systematically vary assumptions, explore logical consequences, and test ideas against known phenomena. His breakthrough insights came from systematic thinking applied to fundamental questions over long periods of time.
Steve Jobs going on walks and what seemed like light bulb breakthroughs happened consistently because he had a process for thinking.
It's like asking a bodybuilder about the best workout split. They absolutely have a process and programs. Same with getting strong. If you want consistent results, you don't wing it. Sure, beginners see changes from any routine, but that's not optimal.
People have different variables: genetics, access to equipment, training experience. Investors have variables too: Bloomberg versus Robinhood, institutional tools versus retail platforms. But both have access to SEC filings. The gap between professional and retail tools is closing fast. Many retail platforms now offer backtesting, trade structuring, and portfolio analytics that rival institutional systems.
There's also process overload. Some people thrive with simple, repeatable approaches. The key is controlling the variables that minimize risk and maximize returns, regardless of sophistication.
Look at the culinary world, where the best chefs are obsessive about process. Thomas Keller, Daniel Boulud, Grant Achatz; these aren't artists who randomly throw ingredients together and hope for the best. They have systematic approaches to flavor development, temperature control, timing, and presentation. Their mise en place isn't just organization, it's a systematic approach to managing complexity under pressure. When these chefs experiment with new dishes, they don't serve them to paying customers until they've been systematically tested and refined. The experimental process is as systematic as the service process.
In filmmaking, the directors who produce consistently great work are the most systematic about their craft. Martin Scorsese has detailed processes for script development, location scouting, casting, and shot composition that he's refined over decades. Christopher Nolan's complex narratives aren't accidents, they're the result of systematic approaches to story structure, visual storytelling, and practical effects that he's developed and refined across multiple films.
Even directors who seem most spontaneous have hidden processes. Robert Altman was famous for his improvisational style, but his "chaos" was carefully orchestrated. He had systematic approaches to casting, rehearsal, and scene construction that created the conditions for controlled spontaneity. Oliver Stone's intense, visceral style looks like pure passion, but it's supported by systematic research methods, detailed storyboarding, and precise editing techniques that he's developed over decades of filmmaking.
Athletes in individual sports provide perhaps the clearest examples. Tennis players like Novak Djokovic, Roger Federer and Rafael Nadal have extraordinarily systematic approaches to training, nutrition, mental preparation, and match strategy. Their on-court instincts are the result of systematic preparation that covers every possible scenario. All the crazy squash shots and between the legs shots Federer makes look effortless he has practiced thousands of times.
Even in more "artistic" sports like surfing or skateboarding, the best surfers have systematic approaches to reading waves, positioning, and technique development. Kelly Slater didn't dominate professional surfing through pure feel, he had systematic approaches to training, equipment optimization, and wave analysis that other surfers couldn't match. I might write more about surfing and board sports and people like Laird Hamilton in future articles.
Even in fields that seem purely creative, like writing, the most productive and consistently high-quality writers have systematic processes. They have routines for generating ideas, structured approaches to research and development, and systematic methods for revision and refinement. They also have repeatable ways to get themselves into the zone and get them out of periods of extended writers block.
Take writers like Jack Kerouac, who famously wrote "On the Road" in one continuous scroll. But Kerouac's spontaneous prose was the result of years of systematic practice and experimentation with different writing techniques. His "spontaneous" style was actually a highly developed process for capturing authentic voice and experience.
Consider the field of comedy, where people love to claim that the best comedians are just "naturally funny." But observe how Dave Chappelle or Jerry Seinfeld actually work. They have systematic approaches to material development, timing, audience reading, and performance refinement. They test material systematically, refine it based on audience response, and develop consistent processes for generating and improving content.
Comedy is about being spontaneous and reading the room, but the ability to read the room and respond spontaneously is the result of systematic practice and experience. The best comedians have developed processes for handling hecklers, adapting to different audiences, and maintaining energy throughout a performance. The best comics practice their craft at smaller venues on off nights before they begin their big tours to famous nightclubs and arenas. Go to Zanies on a random Tuesday night and you don't know who you will find perfecting their set.
The pattern is universal: excellence in any field requires systematic approaches to skill development, performance, and continuous improvement. The people who achieve the highest levels of performance aren't the ones who abandon process, they're the ones who develop the most sophisticated processes and then internalize them to the point where they become unconscious.
People who mock process are usually people who've never achieved excellence in any field. They mistake the polished end result for the systematic preparation that made it possible. They see the effortless performance but ignore the deliberate practice that created it.
This is why the "process vs. outcomes" debate is so revealing. It's not a debate between different philosophies of excellence; it's a debate between people who understand how excellence works and people who don't. The critics are essentially arguing that Michael Jordan, Stephen Curry, Einstein, Martin Scorsese, and every other master of their craft don't understand what made them successful.
That's not just wrong, it's absurd. And it reveals their fundamental misunderstanding of how mastery works in any domain.
But understanding that process drives excellence in every field reveals something counterintuitive about investing: experienced investors often underperform not despite their experience, but because they rely on pattern recognition without building adaptive processes that evolve with changing markets.
When Experience Becomes Dangerous
These are the investors who blow up spectacularly. They're right about the big picture but wrong about execution. They see the 2008 housing crisis coming but don't have rules for position sizing, so they bet too big too early. They recognize the COVID dislocation as a buying opportunity but don't have systematic approaches for managing volatility, so they get stopped out at the bottom.
Experience without process is like having a Ferrari without brakes. You can go fast, but you can't control where you end up. The experienced investor who relies purely on pattern recognition faces a particularly insidious trap: their past success creates overconfidence that leads to systematically poor risk management.
Consider the buy down 5%, reduce down 10%, and have ammunition ready for the down 15-20% to get aggressive rule. This isn't just risk management. It's a systematic framework for converting pattern recognition into actionable decisions and making you sure you survive and stay in the game. When you see a setup you like, this process tells you exactly how to size it, how to manage it, and when to get aggressive. This drives the analysts who are bringing ideas to their PM insane. But that's because they don't understand the process of surviving emotionally for that PM who has scars and knows that lock on capital sometimes doesn't feel like enough when the drawdown is happening.
Without this framework, pattern recognition becomes dangerous. You see the setup, you get excited, you size it based on emotion rather than system, and you have no predetermined plan for what to do if it moves against you. The pattern recognition was correct, but the lack of process killed you.
The truly sophisticated investors understand that experience and pattern recognition are inputs to their process, not substitutes for it. They've learned to systematize their decision making in ways that preserve their edge while protecting them from their own behavioral biases. They know that being right about direction isn't enough. You need to be right about sizing, timing, and risk management too.
One of my old bosses used to tell our investors and prospective investors that we are going to make 12-15%+- every year with 6-9% from returns and the rest through trading, options/volatility, and leverage. If we have a year where the fund generates way more than that return stream and there's nothing really chaotic happening and huge dislocations to exploit, they should redeem because we drifted way beyond our risk profile (we had several 20%+ years, and not a single investor redeemed).
Issue Spotting: The Underrated Skill
The most valuable skill in investing isn't stock picking or market timing. It's issue spotting: the ability to identify what could go wrong before it goes wrong and what would change your mind. This isn't about being pessimistic or paranoid. It's about systematic risk assessment that goes beyond the obvious.
Issue spotting is a learnable skill that develops through structured practice. You start by asking the same questions about every investment: what assumptions does this thesis depend on? What would have to change for this to be wrong? What are the second and third-order effects if the primary thesis breaks down? What are the tail risks that aren't reflected in the base case?
The best issue spotters don't just identify problems. They rank them by probability and impact. They distinguish between risks that would cause modest underperformance and risks that would cause permanent capital loss. They think systematically about correlation: what other positions would be affected if this risk materializes and there is contagion?
Consider how issue spotting applies to the most common investment mistakes. The value trap: a stock that looks cheap but keeps getting cheaper (usually because earnings revisions are going lower). The issue spotter asks: why is this cheap? What would make it more expensive? What are the structural headwinds that might persist? The growth stock that's priced for perfection: the issue spotter asks: what would cause growth to disappoint? What happens to the multiple if growth slows, and what are the precedent situations in our universe? What are the competitive threats that aren't visible yet? Is there anything in the proxy or other filings about the c-suite incentive structure that should give us pause?
Issue spotting skill develops through systematic post mortems. When investments go wrong, the question isn't just "what happened?" It's "what did I miss?" and "how could I have spotted this earlier?" The best investors maintain detailed records of their mistakes and look for patterns in their blind spots.
The institutional investors who survived 2008 weren't necessarily the ones who predicted the crisis. They were the ones who had systematically identified the risks that eventually materialized. They had asked the right questions about leverage, liquidity, correlation, and counterparty risk. They had stress tested their portfolios against scenarios that seemed unlikely but weren't impossible.
This is where experience becomes valuable, not because it provides pattern recognition, but because it provides a catalog of things that can go wrong. The experienced investor has seen more failure modes, more unexpected correlations, more tail risks that materialized. But experience only helps if you've systematically documented and learned from those failures.
Issue spotting also applies to process evaluation. The best investors regularly stress test their own processes. They ask: what market conditions would break our approach? What behavioral biases might we be susceptible to? What organizational dynamics might cause us to make systematically poor decisions? They don't just refine their investment process. They refine their process for evaluating and improving their process.
This systematic approach to risk assessment reveals something fascinating about the investors we most admire.
The Druckenmiller Paradox
Take Stanley Druckenmiller. He's famous for saying he doesn't have a rigid process, that he goes with his gut, that he feels the market. But watch how he actually operates.
He rides momentum in a select group of securities, showing a systematic approach to opportunity set. He sizes big when macro policy is inflecting, demonstrating a systematic approach to position sizing based on conviction. He cuts losses fast, revealing a systematic approach to risk management. There is no one better at laying out their macro thesis publicly for all to see, and then changing his mind days later. Stan pays attention to liquidity like it's a religion, showing a systematic approach to market structure. He rotates capital based on changing conditions, demonstrating a systematic approach to portfolio management.
His wins look the same. His exits feel the same. Even his losses have a pattern. The consistency of behavior reveals the underlying process, even if he doesn't call it that.
What Druckenmiller has isn't the absence of process. It's process that's so sophisticated and internalized that it looks like intuition. He's developed systematic frameworks for every aspect of investing, from idea generation to risk management to exit strategy. He just doesn't need to consciously access them anymore.
The danger comes when people hear "I don't have a process" and think they can achieve similar results through pure instinct. They focus on the pattern recognition part: the "feeling" the market, without understanding the systematic framework that converts those feelings into risk-adjusted returns.
Pattern recognition without process is how you get the investor who correctly predicts the tech crash but sizes the trade wrong, or who sees the housing crisis coming but doesn't have an exit strategy, or who identifies the COVID opportunity but gets stopped out due to poor risk management.
The sophisticated investors aren't the ones with the best gut feelings. They're the ones with the best systems for acting on those gut feelings while controlling downside.
Process as Edge vs. Process Supporting Edge
Understanding whether your process IS your edge or whether your process SUPPORTS your edge separates the truly sophisticated investors from the rest. Some investors have unique insights about individual securities, sectors, or market timing. Their edge is in information, analysis, or pattern recognition. For them, process is the delivery mechanism, the systematic framework that converts superior insights into superior returns while managing downside.
Other investors don't have unique insights about where markets are going. Their edge IS their process: superior frameworks for screening, rank ordering their universe, sizing, timing, and managing positions. Their alpha comes from systematic execution rather than superior stock picking. Both approaches can work, but they require different types of processes.
The insight driven investor needs process that preserves and amplifies their informational edge while preventing them from blowing up when they're wrong. The process driven investor needs frameworks that consistently identify and exploit systematic inefficiencies in how markets price and move. The fatal mistake is not knowing which type you are.
The insight driven investor who tries to rely purely on gut feel without systematic position sizing and risk management will eventually blow up. The process driven investor who thinks they have superior insights and starts taking concentrated bets outside their systematic framework will underperform.
Consider the idea junkie with a good nose who's impatient with diligence. Their edge is in rapid pattern recognition and opportunity identification. But they still need process, just process that's optimized for speed and volume rather than depth and precision. They need systematic frameworks for quickly evaluating which ideas are worth pursuing, how to size them, and when to cut them loose.
The merger arb manager's edge IS their process. They likely don't have superior insights about whether deals will close, although many believe they can read the fulcrum merger documents better than anyone else, and some can. They have superior frameworks for evaluating deal probability, structuring positions, and managing risk across a portfolio of announced transactions. Their process is their product and they size through conviction accordingly.
Whether your edge is informational or systematic, you need process to convert it into sustainable returns. The question isn't whether you need process. The question is what type of process best serves your particular edge, and how you systematically develop and refine that process over time.
The Twitter Stock Jockey: Process by Default
There's a particular type of investor who swears they have no process, no models, no systematic approach. They're the Twitter stock jockeys who spend half their day scrolling through financial Twitter, clicking on links to articles and news stories, hunting for datapoints that confirm their existing biases or spark new ideas.
They mock the analysts who build models. They dismiss the portfolio managers who use systematic screening tools. They pride themselves on being "pure" investors who rely on intuition and street smarts. They think they're operating without process, but they're actually operating with a very specific process. They just don't recognize it.
Their process is curation by algorithm. Twitter's recommendation engine is feeding them information based on their past behavior, their connections, their engagement patterns. They're not getting a random sample of market information. They're getting a highly filtered view that's optimized for engagement rather than accuracy or completeness.
Their process is confirmation bias masquerading as due diligence. They click on the articles that confirm what they already believe. They follow the accounts that reinforce their existing views. They engage with the content that makes them feel smart. They're not seeking disconfirming evidence despite tweeting and asking for counter views. They're seeking validation.
Their process is momentum chasing dressed up as contrarian thinking. They tweet, "I have a variant view." But do they really? They're following the same accounts, reading the same articles, getting excited about the same ideas as thousands of other Twitter users. They think they're discovering hidden gems, but they're often just adopters of ideas that are already spreading through their network.
The really insidious part is that this process can work for a while. During bull markets, when momentum strategies outperform, when retail participation is high, when viral ideas drive stock prices, the Twitter stock jockey can look brilliant. They're riding the same waves as everyone else in their network, but they're riding them early enough to profit. It's the same people telling you to trade the market in front of you.
But this isn't sustainable alpha. It's network effects and momentum masquerading as investment skill. When market conditions change, when momentum reverses, when viral ideas stop driving prices, the Twitter stock jockey's "process" breaks down. They don't have systematic frameworks for adapting to new conditions because they never acknowledged they had a process in the first place.
The sophisticated Twitter users, the ones who actually generate sustainable returns (and don't publish them whether they are doing poorly or on a hot streak), have very different processes. They use social media as an information source, not as a decision making framework. They have systematic approaches for evaluating which ideas are worth pursuing, how to size them, and when to exit them. They understand that Twitter is a tool, not a strategy.
They also understand the limitations of their information flow. They know that Twitter tends to amplify certain types of stories and ignore others. They compensate for this bias by deliberately seeking out contradictory information, by following accounts that challenge their views, by reading sources that aren't optimized for engagement.
The real difference isn't between process and no process. It's between conscious process and unconscious process. The Twitter stock jockey has a process. They just don't control it. The algorithm controls it. The network effects control it. The momentum controls it. They're not making independent decisions. They're being herded by systems they don't understand or acknowledge.
This is why the best investors are skeptical of information sources that are optimized for engagement rather than accuracy. They understand that the most important investment insights are often boring, complex, and difficult to communicate in tweet length format. They use social media as a starting point for research, not as a substitute for it.
Understanding this distinction between conscious and unconscious process reveals itself clearly when you observe the daily operations of successful investment firms.
The Hidden Machinery
Spend a week inside a hedge fund that has been around for at least a cycle, and you'll see the process in action. Even in the apparent chaos. Whiteboards layered with tickers and scratched out catalysts. Junior analysts scrambling to interpret one or two line emails from the PM sent at 9pm. Someone modeling a regional bank for six hours because of a fleeting comment in a morning meeting. It's not a clean system. It's a living one.
Capital gets pulled from one analyst and handed to another. Nobody explains why, but everyone knows. Momentum gets rewarded. Dead weight gets cut. Macro researchers read sell-side notes in private while pretending they only trust primary sources. Team dinners look casual, but the power dynamics are in full view: who speaks first, who gets asked for updates, who's already being faded.
Follow them to the Hamptons and the rhythm doesn't stop. They work remotely all summer. Everyone pretends they're taking it easy, but the screens are still on, communication flying from all angles: email, text, phone, meetings, Bloomberg messages and chats. Fund wide drawdown? They gather for dinner or the PM meets analysts individually for coffee. Nobody says it directly, but everyone knows the tone has shifted. One analyst is hot, capital gets tilted in their direction. Another is cold, they're quietly benched.
That's process. It may not sound like it, but that's the routine. That's the rhythm. That's how the system adapts.
Some PMs secretly read the sell side and blast emails at all hours asking for explanations about positions, position sizes, etc. Some forward ideas from friends at other shops and tell their analyst, "this feels like a takeout target," or "so-and-so at another fund might go activist here." It's messy. It's opaque. It doesn't sound like process. But it's happening over and over, year after year.
Again, take the basic risk management that every PM has heard: buy down 5%, reduce down 10%, and have ammunition ready for the down 15-20% to get aggressive. If someone has done this for years, even if they don't read their daily risk report closely, this is still process. It's muscle memory. It's pattern recognition. It's systematic behavior that repeats under similar conditions.
Emailing your team for their best 2-3 ideas because you want to shrink the book to see where analyst and sector PMs' convictions really are? That's process. Taking an analyst to play tennis who is really your lieutenant on the trading desk to see how everyone is doing? That's process too. The PM who asks their stats quant person to do an analytic study on an analyst hit rate or how crowded their short ideas are, or the analysis on the book only in the middle of a drawdown. Still process.
Using Lightkeeper to track your analysts and see how much to pay them every year? Process. That PM who always asks the sector analyst the same redundant questions? That's part of his process. That analyst figuring out "how to manage up" and knowing exactly what those questions will be and how to answer them in front of peers at Monday morning portfolio meetings? That's part of the process too.
Some execute all parts of the process exceptionally well. Others are particularly good at diligence but don't know a thing about risk management. Others are idea junkies with a good nose, "bunny has a good nose," and they're sourcing and origination machines, but they're impatient with diligence. They still have a process for distilling what's important and discarding the rest.
Some PMs have tight risk because the mothership tells them they have to. Others have tight risk because of lack of trust, knowing they can't handle drawdowns from single name positions and don't want the team talking when they aren't around. Same behavior, different motivations. Both are process driven.
The loudest critics on social media insist that process is just branding. They claim they don't need structure because their outcomes speak for themselves. They say process doesn't produce outcomes, that process is marketing, that process is what hedge funds sell to raise capital. Some of them are anonymous. Some have posted good returns. And that's what makes the argument more seductive.
But there's something revealing about the most vocal critics. Many worked for allocators at some point. Probably in minimized roles. Writing memos, tracking managers, trying to build a name inside a seat they couldn't grow out of. Maybe they wanted to jump to the other side. Maybe they couldn't. The bitterness bleeds through in how they talk. It's not just skepticism. It's sabotage.
They say outcomes are all that matter. But they never define how to repeat them. They don't show the structure behind the win. They just say "do better." That's not coaching. That's gaslighting. They don't want others to improve. They want to feel superior.
Let's address whether process is more marketing than substance. Could be. But that doesn't mean it's not used or that most of it isn't used. During a drawdown, I guarantee you the trigger puller at successful funds steps back in big time and becomes part of the re-underwriting process in a different, more invasive way. They'll demand attention and even want their people to have face time in the office. The bullpen will demand face time too. That's when process steps up its game. It starts from the top.
It becomes a lot less quiet and a lot more questioning. Reviewing risk reports, talking to counterparties, even trying to handhold and comfort LPs while the marketing people pull in the PM/CIO/trigger pullers. The process intensifies under pressure because that's when structure matters most.
This dynamic is why fewer emerging managers break through today. The marketing machine favors incumbents. There are truly great investors out there who are undercapitalized because their edge doesn't translate into fundraising theater.
Track records historically were really about 8 years because you capture the end of a cycle, the beginning of the next cycle, and then the end of that one. This current cycle, excluding the COVID period, is arguably extra innings. But looking backwards, establishing a track record and tying the output back to process is doable, especially for a PM or even an analyst who had "trading authority."
The academic literature backs this up. Bailey and López de Prado. Dalbar. SPIVA. The data shows that structured approaches outperform ad-hoc decisions, especially when adjusted for risk and drawdowns. Not every strategy is about beating the S&P 500. Some are volatility dampeners. Some exist to fill portfolio voids. Some hedge tail risks. Process supports those goals too.
If you followed these successful investors around like a documentary crew, you'd see the pattern. You'd see the early mornings. The Sunday night prep. The messages flying at all hours. The unspoken rules. The way they rehearse ideas with an analyst before bringing it to the full team. You'd see the routines. The cadence. The shifts in posture during risk meetings. You'd see who starts talking less when they're underperforming. Who steps up when they smell opportunity.
These aren't isolated anecdotes. They're repeated, practiced, built into the system. Just because it's not written in a manual doesn't mean it isn't real. The best investors don't need to preach process because they live it. It's how they survive. How they manage stress. How they don't freeze when volatility spikes or a trade goes wrong.
The critics love quoting Taleb. Kahneman. SPIVA. They say process is a crutch. But Taleb isn't anti-process. He's anti-fragility. Kahneman warns that humans are biased, but that's exactly why good investors build systems to fight their own impulses. SPIVA doesn't prove process is pointless. It proves most people don't have one worth executing. Most active managers fail not because process is fake, but because they didn't stick to theirs or didn't have one in the first place.
Good process mutates. It evolves. It bends when it needs to, but it doesn't vanish. And when the world goes sideways, when the Fed shocks the curve or liquidity evaporates, process is what gives you the chance to not panic. To not overtrade. To not blow up. Process is what keeps you standing when everyone else is screaming.
The Repeatability Test
If you can't explain how you'd teach someone else to get similar results, you either don't actually have repeatable results, or you're hiding your process (key man/PM risk: analysts at this shop should pray their PM doesn’t get hit by a bus). Both are problems, but for different reasons.
The first group genuinely doesn't understand what they're doing. They might have gotten lucky during a favorable regime or launched their fund at the beginning of the cycle. They might have benefited from a trend that lifted all boats. They might have one or two big wins that make their overall numbers look good. But when pressed for details about how they'd replicate those results, they deflect or get vague.
The second group understands exactly what they're doing, but they're not sharing. Maybe they think their edge is too valuable to give away. Maybe they're worried about competition. Maybe they enjoy the mystique. But when they claim to have no process while consistently outperforming, they're being dishonest.
The tell is in the details. Consistent outcomes don't come from random inputs. If someone truly had no process, their results would be random. Random doesn't produce eight years of outperformance. Random doesn't survive multiple market regimes. Random doesn't know when to cut losses fast or size big on macro inflections.
Pattern recognition built through thousands of repetitions isn't instinct. It's experience crystallized into reliable behavior. When Druckenmiller talks about "feeling" the market, he's not describing magic. He's describing pattern recognition so well-developed that it feels intuitive.
The same applies to other fields. A chef doesn't say "I don't follow recipes, I just cook." They might improvise, but they know how heat works, how flavors combine, how timing matters. They have internalized principles that guide their decisions. That's their process.
Great investors are pattern recognition machines. They've seen enough market cycles to know when something feels familiar. They've made enough mistakes to know what warning signs to watch for. They've had enough wins to know what success feels like before it happens.
But pattern recognition only works if you're paying attention to the right patterns. If you're not tracking what works and what doesn't, you can't improve. If you're not honest about your failures, you can't learn from them. If you're not systematic about your approach, you can't scale it.
The anonymous critics who mock process are asking you to believe that excellence can be achieved through randomness. That's not just wrong, it's dangerous. They're encouraging people to abandon structure in favor of gut feelings and hot streaks.
But here's what they're not telling you: even their criticism follows a pattern. They attack process when markets are trending up and individual stock picking looks easy. They get quieter during drawdowns. They focus on short-term performance metrics that favor momentum over consistency. They never show their full track record or explain their methodology.
That's a process too. It's just not one designed to help you succeed.
Building Your Own Process
The goal isn't to copy someone else's process. It's to understand your own, then systematically improve it. This is where most investors get stuck. They know they need structure, but they don't know how to build it or where to start.
Start by tracking what you actually do, not what you think you do. Most people have implicit processes that they've never made explicit. Do you always check certain metrics before buying a stock? Do you have rules for position sizing? Do you trim winners at certain levels? Do you cut losses at specific thresholds? Do you research companies in a particular order? Do you avoid certain sectors or market caps?
If you do any of these things consistently, you have the beginning of a process. The question is whether it's working and whether it's scalable.
Good process evolves. It adapts to changing market conditions while maintaining core principles. It's flexible enough to handle new opportunities but structured enough to avoid repeated mistakes. It's complex enough to generate alpha but simple enough to execute under pressure.
The best investors aren't rigid rule followers. They're disciplined pattern recognizers. They've developed systems that help them make better decisions more consistently. They've learned to trust their process even when it feels uncomfortable.
But process without conviction is just bureaucracy. You need to believe in your approach enough to stick with it during difficult periods. You need to understand why it works so you can modify it when conditions change. You need to be honest about its limitations so you can manage risk appropriately.
The most successful investors I know didn't develop their processes in isolation. They had mentors, advisors, or peers who helped them identify blind spots and refine their approaches. They understood that you can't see your own swing clearly. You need someone who can spot the flaws in your technique before they become career-ending mistakes.
Building process is like building muscle. It requires consistent practice, honest feedback, and systematic progression. You can't just read about it or think about it. You have to do it, measure it, and improve it over time.
The Deeper Truth
Here's what the critics don't understand: the process versus outcomes debate isn't really about investing. It's about how human excellence works in any domain. It's about whether you believe in systematic improvement or random luck. It's about whether you think success is replicable or accidental.
The critics who dismiss process are essentially arguing that mastery is a myth. They're saying that the greatest performers in every field, from sports to science to business, don't actually understand what made them successful. They're claiming that decades of research on deliberate practice, systematic training, and skill development is wrong.
That's not just intellectually dishonest. It's dangerous. Because when you convince people that structure doesn't matter, that systematic thinking is optional, that randomness is as good as discipline, you're encouraging them to abandon the very things that create sustainable success.
The most successful investors understand this intuitively. They don't just want to be right occasionally. They want to be right systematically. They don't just want good years. They want good decades. They don't just want to beat the market sometimes. They want to compound capital consistently while managing downside risk.
That requires process. Not perfect process, but conscious process. Not rigid process, but adaptive process. Not process for its own sake, but process that serves the goal of sustainable outperformance.
This understanding leads to a fundamental recognition about the nature of investment success.
The Choice
Every investor faces the same choice: consciously develop your process or unconsciously follow someone else's. There's no third option. You can't operate without structure. You can only operate with structure you control or structure that controls you.
The Twitter algorithm controls the Twitter stock jockey. The momentum controls the pattern chaser. The fear controls the panic seller. The greed controls the FOMO buyer. These aren't examples of process free investing. They're examples of unconscious process driven by external forces.
The best investors have learned to internalize their decision making frameworks so deeply that they look intuitive. But they started with conscious, systematic approaches to every aspect of their craft. They built their processes deliberately, tested them rigorously, and refined them continuously.
Your process doesn't need to be perfect. It needs to be yours. It needs to reflect your strengths, account for your weaknesses, and align with your goals. It needs to be something you can execute consistently over multiple market cycles.
The investors who claim to have no process are either lying or deluded. Don't let them convince you that structure is optional. Don't let them convince you that outcomes matter more than methodology. Don't let them convince you that excellence can be achieved through randomness.
Excellence is the result of doing simple things consistently well. That's not marketing. That's not branding. That's not theory. That's reality.
Everyone has a process. The question is whether you're honest about yours, whether it's sophisticated enough to generate sustainable alpha, and whether you're committed to improving it over time.
The most successful investors I know are constantly refining their processes. They're not satisfied with what got them here. They're focused on what will get them there. They understand that markets evolve, conditions change, and what worked yesterday might not work tomorrow.
But they also understand that the principles underlying good process are timeless. Systematic thinking. Rigorous analysis. Disciplined execution. Continuous improvement. These aren't temporary advantages. They're permanent edges in a world that rewards consistency over chaos.
The process critics will always exist. They'll mock systematic thinking during bull markets and disappear during drawdowns. They'll claim that structure is for the weak and that intuition is for the strong. They'll promise shortcuts to success while delivering roads to ruin.
Ignore them.
Build your process. Own your process. Live your process.
Because in the end, everyone has a process. The successful ones just admit it.
If this piece meant something to you, share it with someone who could benefit. Share it with someone who tells you that you don’t need a process and to focus on outcomes.
You can find me on twitter at @MrMojoRisinX.