On Luck.
By the time you finish reading this, a flash of luck may have touched someone you know—your neighbor, your dog, or perhaps even you. I’ve been thinking about randomness and luck recently, and I find it’s this universal fascination with fortune that leads us to believe that moments of good luck are a direct payout for our hard work, destiny, or some special inner quality. More often than not, though, I’m left wondering if the real difference is simply good timing.
I’ve been reading a lot of Howard Marks (Oaktree Capital) on the psychology of stock market investing. For someone like me who missed out on such topics growing up—and was taught more about the Three Wise Men than about options trading—Marks’s comment on outperforming the market is sharp: you need either luck or superior insight. I think inherently we all prefer to work on the insight part, rather than relying on chance. But his general commentary on luck raises a conceptual problem in the phrase “making your own luck.” Isn’t that fundamentally contradictory? If you are intentionally generating a positive outcome, it’s not luck—it’s preparation or skill, right?
Nassim Taleb, in Fooled by Randomness, argues that luck plays a far greater, and often unrecognized, role in success than most people admit, especially in volatile fields like finance. He suggests that those truly outrageously successful individuals often owe their peak achievements to “attributable variance”—a big, sheer component of random luck.
So, where does that leave us? Do we just sit around hoping for that knock on the door or phone call telling us of a great aunt who passed away and left the Malibu property to us and only us? Of course not.
Marks, who doesn’t shy away from the role of luck, actually offers a better perspective for action. He stresses that the most crucial element is simply being ready. As he puts it: “Luck is when opportunity comes, and you are just ready.”
It’s not about denying randomness; it’s about being positioned for it. Marks believes that opportunities in the market don’t just come to you; you need to position yourself correctly, be prepared, and be ready to seize the moment when it arrives. He also gives a great warning against the “insufferably smug” attitude of those who believe their success is solely due to their own merits. It’s a good reminder to stay humble, but more importantly, to stay focused.
My takeaway—simple, under-read, and uninformed as it may be—is this: Acknowledging the role of luck and randomness in life takes the pressure off. I will worry less about what I can’t control or being envious of someone else’s Malibu panoramic ocean view. Instead, I’ll concentrate on the challenging task of simply being in the right place at the right time—and doing it more often.