Imagine a situation in which the captain of the Indian cricket team can choose only 1 more bowler in his team out of the 2 in front of him.
He takes them to the nets and both perform similarly.
So, eventually the captain flips a coin and picks one of them.
In the next match again it’s the same situation and now the one got chosen has some experience of bowling in actual match and hence the experience gives him another opportunity.
By the time, it’s the 3rd match, the one who has already played 2 matches has a track record which places him in a better position than the 1st one to be in the team and just like that the flip of the coin created a star while finishing off a promising career.
This is what’s famously known as “The Matthew effect” which illustrates how those who begin with an advantage accumulate more advantage over time and those begin with a disadvantage keep accumulating more disadvantage.
It is fascinating the role that luck can play on ones success.
Anyone can experience luck. In his Physics, Aristotle gives a famous example of chance: a man who is owed money visits some place for an entirely different reason (say, goes to the marketplace to buy pomegranates), by accident runs into the man who owes him money, and is able to collect it.
But Aristotle explores the possibility of a second kind of lucky person in the Eudemian Ethics. This one is consistently lucky, succeeds without recourse to rational deliberation, especially thrives in risky pursuits and in matters where, although skill is decisive, a lot of luck is involved—for example, in military affairs or piloting a ship. Aristotle has no doubt they exist, but the lucky are an odd group of people. They do something that seems impossible. They succeed by chance “always or for the most part,” while chance seems to have as part of its definition precisely that it does not happen always or for the most part.
Fascinatingly, he frames it as a question of internal desire. Consistently lucky people somehow have an urge toward what is good for them, just what they should, when they should, and how they should.
You Got Lucky-What’s next?
Yeah, you won the lottery, what’s next?
As per a research, 70% of all lottery winner lose it all within 5 years.
Getting lucky was random, you didn’t plan for it and you didn’t have to work for it.
However, what follows require work.
In both the above example, once the bowler got the chance, he had to perform to ensure his place in the team for the next match.
The coin flip got you in but will not keep you there.
As Aristotle says, the consistently luck people have a desire to succeed and the luck favours them.
There lies the conundrum
Whether it’s the bowler who retains his space or someone who succeeds consistently, such people are in majority.
The reason 70% of all lottery winners lose it all is because the desire to succeed needed to maintain the luck is missing.
The new investor in equity markets winning as soon as he enters is experiencing nothing other than beginner’s luck.
However, investing is a serious business.
It is not about just getting there and investing, it goes way beyond that.
Which sector, which industry, which company, who has the moat, is the price in your favour-risk/reward etc., etc.,
It needs to work to stay lucky and that’s not everyone’s cup of tea.
Investing for example, needs creating a discipline and not doing stuff for the heck of it.
Yes, your portfolio needs updating, its needs changes, however that can’t be the objective.
You have to set up the perspective right.
You spend your energy on creating a right portfolio that fits with your risk-reward and investing psychology, whether directly or through an advisor and then keep yourself aware of what’s working and what’s not, what requires change and what needs to stay on and for how long, what needs addition and what needs subtraction and for what reason.
You want to stay luck, you need to put in the work whether its investing, your job, your relationship and life in general.
Thank you for Reading
Irreverentinvestor.com 