What does e + r = o mean? I’ve never heard of it. It’s the idea that highly successful people focus on influencing outcomes by controlling their reactions to events, instead of trying to control the events themselves. e + r = o means “Event + Response = Outcome.”

When it comes to investing, a lot of events are out of our control anyway. Events like bull markets, bear markets, political turmoil and economic instability. So how do we, as investors, influence control of our reactions to these events, events which are outside of our control? We do so by having a clearly defined investment philosophy. Market events are out of our control, but our response to them can be controlled. And our investment philosophy prepares us for when these events occur to be proactive and not reactive with our retirement portfolios, allowing us to filter out short-term noise while focusing on long-term outcomes.

You can read this DFA article for more information.