How do you tell a good decision from a good outcome?

Why this matters. In an environment this noisy the two come apart constantly, and the whole of your self-assessment depends on not confusing them.

A decision can be sound and lose money. A decision can be careless and make money. Over a short run, outcomes tell you almost nothing about which you made.

The distinction, and the name for getting it wrong

Practitioner testimony, labelled: Annie Duke calls judging a decision by its result "resulting", and keeps the decision record separate from the outcome record for exactly this reason. Her background is professional card play — the method transfers, and this academy does not treat markets as a game of chance, so the setting stays behind.

Why markets make it worse

Conceptual frame: Kahneman and Klein (2009) set the condition for trusting experience — a regular environment plus prompt feedback. Markets supply neither, which Course 1 covered in why is a market the worst possible place to learn from experience. Without prompt feedback, outcome is the only signal that arrives — so it becomes the signal, regardless of what it can support.

What a decision can be graded on

Four things, all available at the time and none requiring the outcome: was the case stated, was the invalidation condition written, was the size the one the process specifies, and was the plan followed.

All four are yes-or-no, all four are knowable on the day, and none of them is about whether it worked.

The artefact

A two-column ledger: decision quality graded at the time, outcome recorded later, never in the same sitting.

Course 2 introduced this per position, in what does a price rising after you sold do to your next decision. Here it becomes the instrument you read in aggregate — and in aggregate the disagreement between the columns is the most informative thing you own.

Try it now

Grade your last five decisions on the four yes-or-no questions, without looking at what happened. Then look. Note how strong the pull was to peek first.