Morgan Housel is soon becoming one of my favourite writers and thinkers.
A thought-provoking quote from his Ironies of luck article
If risk is what happens when you make good decisions but end up with a bad outcome, luck is what happens when you make bad or mediocre decisions but end up with a great outcome. They both happen because the world is too complex to allow 100% of your actions dictate 100% of your outcomes. They are mirrored cousins, driven by the same thing: You are one person in a 7 billion player game, and the accidental impact of other people’s actions can be more consequential than your own.
▶ People are good at discounting risks that threaten the continuation of their past success. They are equally good at discounting the role of luck in their past success.
▶ risk doesn’t care about how much effort you put into something, and neither does luck. Both just show up, unannounced, eager to humble you. The only difference is that risk humbles you as soon as it arrives, while luck humbles you down the road, once it vanishes, leaving you with only the memories you shared together. You can manage risk and luck. You can ignore risk and luck. But you can’t get rid of either.
▶ structural luck is harder to identify, because the person enjoying it becomes used to it. That skews their perception of how most of the world operates, which almost always comes back to bite them at some point, and is hard to accept when it does.
I know one couple of people who do not believe in luck but only their hard work. 🤦🏽♂️
Paul Tudor Jones was one of the most successful traders in the world. Then he woke up one day wondering why. “In a moment of frightening enlightenment in 1993, I knew that I really did not know exactly how and why I had made all the money that I had over the prior 17 years,”…