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I read Joel Greenblatt's 'The Little Book that beats the market' a few weeks ago, and the investing thesis that he outlines is a fairly simple formula that boils down to identifying under-valued companies through simple objective metrics and staying invested in them for a pre-defined period of time. 

The strategy itself has been tested various times over various periods of time and various markets and has indeed been shown to beat the market on most occasions. 

Yet, while addressing the point of what is most difficult in employing this strategy, what he says boils down to one word - faith. 

When the strategy isn't yielding the best returns for a few months or a year or two, and is underperforming the market, it takes incredible faith to stay invested and to continue to believe in the strategy. 

And most people pull out. Especially those who manage other people's money and have to report quarterly numbers on performance of their investments, who cannot handle the pressure of reporting low gains or losses to their investors. This very phenomenon comes out even in Michael Lewis's 'The Big Short'.

Outside the world of investing, this phenomenon is evident in football teams where the players need to believe in the system that their manager continues to deploy, even if it isn't yielding results in the short-term. 

For any outcome to be realised, there are necessary conditions that need to be true and there are sufficient conditions that need to be true, and some may overlap between the two. 

Without the necessary conditions being met, there is no chance of the outcome being realised. However, the necessary conditions being met isn't enough. It is insufficient. 

The outcome is only realised when the conditions sufficient to make it happen are met.

For any strategy to work, belief that the strategy will work is a necessary condition. And this belief needs to be held by those implementing the strategy. 

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