Masters in Business · Wednesday, August 26, 2026
David Bonson explains the distinction between endogenous returns, which stem from a company's internal performance and profit growth, and exogenous returns, which are driven by external factors like market sentiment or other investors' psychology. He advocates for an endogenous approach, focusing on business fundamentals over predicting market trends.
“So in this particular case, we're sort of referring to investors the what what you believe others psychology will be, what how.”
“But when you're talking about stuff that is.”
“And it is an entirely different mentality and approach. I do not suggest everyone's self-aware of this. I don't think it's total self-conscious, but I think that the implicit mentality or objective of many investors today is that they're betting on what others are going to do as opposed to betting on how a company is going to perform.”