I just shared an updated article on the difference between Skill and Luck.
Serendipitously, this article showed up in my feed from 2012. Instead of updating it, I want to share it as I wrote it, because it's still relevant, and it might lose some of its magic if I update it.
So, here it is:
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Title: Some Thoughts On Whether Luck Is Something You Create
Date: November 3rd, 2012
Doing the same things, the same ways, has predictable results. Sometimes, it is important to do things differently.
Here is a photo of me at the National Society of Black Engineers' Professional Development Conference, where I had the opportunity to present and participate in several panel discussions.
That is me, the Mitchell brothers, and Steadman Graham
I'm neither black, nor an engineer, and they aren't traders; so why would they ask me to present... and why would I say yes?
Value is often added at the edges. Likewise, good things often happen when you travel outside your comfort or habit zone.
I gained a lot from the experience. For example, I had a discussion with a nuclear physicist who talked about how they use computer simulations to model the effects of a nuclear explosion. That gave me great ideas about how to measure the effect of a particular trading system or algorithm on a market.
Luck does favor the prepared. That conversation could just as easily have been me simply saying 'hello,' shaking hands and moving on to the next person. To some extent, the ability to take advantage of opportunities comes from the intent to find them.
Is Luck Something That You Can Maximize, Or Would You Consider It Random?
It's possible that luck is both random and something you can maximize.
Here is an example. Many people consider the stock market to be random. Nonetheless, there are groups of people who consistently beat the market and trade profitably. How is that possible?
To explain, let's examine the decision to purchase Apple Computer stock. Regardless of whether that decision was based on gut instinct, fundamental analysis, or a technical chart pattern ... whether the price moves up or down the moment after that purchase is for the most part random.
However, if you make 10,000 trades over time, then your ability to make and keep money is about how you manage risk and opportunity. At that point, your system is not necessarily random. Consequently, it is something that you can improve.
Transform Results By Getting Un-Stuck.
Improvement means getting better and different results. And, as you already know, it doesn't make sense to continue to do the same thing, yet expect different results. So, a key skill is learning to recognize when things are "stuck" in a rut.
The trouble with many "ruts" is that you don't know you're in one, while you're in one. Consequently, it often takes a different perspective to become aware of new possibilities, opportunities, or best next steps.
Implications.
The interesting thing that this implies is that those opportunities were always there ... they just weren't there for you in your current state of awareness.
Similarly, recognize that many of the processes that we rely on limit our "luck" or opportunities precisely because they limit our choices. When this is done consciously it can be helpful. However, when it's an unconscious act, it can be dangerous.
In general, you can categorize many tools as either being multipliers or diminishers. Neither one is good or bad in and of itself. The trick is to recognize that you have a choice and that not choosing is still a choice.
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I think it holds up. What do you think?
The World's Top 25 Defense Companies
What's happening in the Middle East with the Israel-Hamas war is incredibly complicated and polarizing. On top of the long history, partisan interpretations, chronic conflict, and acute suffering, you're seeing propaganda being used at a scale beyond what we've seen before.
Technology is a big driver of misinformation - and what is happening now provides an early warning of what's to come in future wars and political contests.
While the topic of Israel and Hamas is beyond the purview of this blog/newsletter - the impact of war on markets is not.
My heart is with all impacted, and I'm never rooting for war or the death of innocent civilians.
With that said, war seems to be a fact of life.
The most powerful countries in the world spend billions of dollars on defense a year.
In light of this, VisualCapitalist put together a chart identifying the top 25 defense companies in the world. Many of these have seen massive spikes in price in the past few months. I was surprised by how many of the companies I didn't recognize.
via VisualCapitalist
The U.S. unsurprisingly tops the list, with Lockheed and RTX (formerly Raytheon) taking the top two spots.
While we don't usually think of some of these companies as defense contractors, Airbus produces multiple drones and transports, Rolls Royce is a supplier of aircraft and naval engines, and Honeywell is actually involved not just in aerospace - but actual space.
Understanding where and how companies generate revenue (as well as comprehending the relevant competitive landscapes and cooperative ecosystems) are crucial activities regardless of investment strategy.
I believe it's easier to predict human nature than it is to predict technology. There is a reason that new technology often flows into porn, gambling, and military earlier than other areas ... the reason is that it's so easy to monetize there. We know opportunity often rises from pain and conflict - so it's still valuable to understand these concepts and figures.
Hope that helps.
Posted at 05:29 PM in Business, Current Affairs, Ideas, Market Commentary, Religion, Science, Trading, Web/Tech | Permalink | Comments (0)
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