Skill versus luck

[Jurgis]

I thought I got reference to this book from CoBF, but I cannot find it when I search.

Anyway

 

Richard Wiseman

The Luck Factor

https://smile.amazon.com/dp/0099443244/ref=cm_sw_em_r_mt_dp_U_rGFnDbGY7H1JJ

 

 

[LC]

you misunderstand the example.  my skill level was very high (got all 80 questions I could prepare for correct) but I am not god (20 questions I couldn't get to, and therefore needed luck for them to not be on the exam; with bad luck all 20 would be on the exam and my skill that I exhibited to the world would have been zero...I would be labelled a dunce).

Take it to the extreme: you only review and know the answer to 1 question. Is your skill level still very high?

[Guest cherzeca]

you misunderstand the example.  my skill level was very high (got all 80 questions I could prepare for correct) but I am not god (20 questions I couldn't get to, and therefore needed luck for them to not be on the exam; with bad luck all 20 would be on the exam and my skill that I exhibited to the world would have been zero...I would be labelled a dunce).

Take it to the extreme: you only review and know the answer to 1 question. Is your skill level still very high?

 

there is a component of effort and demonstration in skill, right?  I may be skillful in an area of engagement and demonstrate that by answering correctly 80 out of 80 questions presented.  if you think you have demonstrated the same skill level answering correctly 1 out of 1 questions correctly, then I wish you good luck!

[Cigarbutt]

I know many now consider Mr. Benjamin Graham as yesterday's man and (from Mr. Munger, recently) "Graham had a lot to learn as an investor" but I still hold great respect for the man and his writings and try to remember that he went through a period of tremendous adversity (from the investment point of view) and remained level headed and graceful. His investment record can be debated but he had this to say about luck, when looking back and referring to his overall record as well as the effect of the Geico acquisition decision:

 

"Ironically enough, the aggregate of profits accruing from this single investment decision far exceeded the sum of all the others realized through 20 years of wide-ranging operations in the partners’ specialized fields, involving much investigation, endless pondering, and countless individual decisions.  Are there morals to this story of value to the intelligent investor?  [One] is that one lucky break, or one supremely shrewd decision—can we tell them apart?—may count for more than a lifetime of journeyman efforts."

 

But we've all become more sophisticated now. Right?

 

@DooDiligence

Scientific American produced this short video a while ago about the 4-leaf clover and there is an interesting parallel with 'filters' we use when trying to identify a value opportunity.

https://www.scientificamerican.com/video/how-science-can-help-you-find-four-leaf-clover-video/

 

 

 

 

 

 

 

 

[DooDiligence]

I know many now consider Mr. Benjamin Graham as yesterday's man and (from Mr. Munger, recently) "Graham had a lot to learn as an investor" but I still hold great respect for the man and his writings and try to remember that he went through a period of tremendous adversity (from the investment point of view) and remained level headed and graceful. His investment record can be debated but he had this to say about luck, when looking back and referring to his overall record as well as the effect of the Geico acquisition decision:

 

"Ironically enough, the aggregate of profits accruing from this single investment decision far exceeded the sum of all the others realized through 20 years of wide-ranging operations in the partners’ specialized fields, involving much investigation, endless pondering, and countless individual decisions.  Are there morals to this story of value to the intelligent investor?  [One] is that one lucky break, or one supremely shrewd decision—can we tell them apart?—may count for more than a lifetime of journeyman efforts."

 

But we've all become more sophisticated now. Right?

 

@DooDiligence

Scientific American produced this short video a while ago about the 4-leaf clover and there is an interesting parallel with 'filters' we use when trying to identify a value opportunity.

https://www.scientificamerican.com/video/how-science-can-help-you-find-four-leaf-clover-video/

 

The roll of luck in investing & life is like a dividend for hard / smart work.