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On one actually thinks luck does not play a role in financial success. But since it is hard to quantify luck and rude to suggest people’s success in owed to it, the default stand is stance to implicitly ignore luck as a factor of success.
There are a billon investor in the world. By chance, would you expect 10 of them to become billionaires predominantly off luck? You would reply, of course. But then if I ask you to name those investors to their face, you will likely back down.
When judging others, attributing success to luck makes you look jealous and mean, even if we know it exits. And when judging yourself, attributing success to luck can be too demoralizing to accept.
If you are rich and tall, your brother is more likely to also be rich than he is tall. I think most of us intuitively know this is true, the quality of your deducting and the doors that open for you are heavily liked to your parents’ socioeconomic status.
Everything worth pursuing has less than 100% odds of succeeding and risk is just what happens when you end up on the unfortunate side of that equation. Just as with luck, the story gets too hard, too messy, too complex if we try to pick apart how much of an outcome was a conscious decision versus a risk.
Say I buy a stock and five years later it is gone nowhere. It is possible that I made a bad decision by buying it in the first place. It is also possible that I made good decision that had an 80% chance of making money and I just happened to end up on the side of the unfortunate 20%. How do I know which is which? Did I make mistake or did I just experience the reality of risk?
It is possible to satirically measure where some decisions were wise. But in the real world, day to day, we simply do not. It is too hard. We prefer simple stores, which are easy but often devilishly misleading.
Countless fortunes owe their outcome to leverage. The best managers drive their employees as hard as they can.
The customer is always right and customer do not know that they want are bother accepted business wisdom.
.Risk and luck are twins.
This is not an easy problem to solve. The difficulty in identifying what is luck, what is skill and what is rick is one of the biggest problems we face when trying to learn about the best way to manage money.
