Investing is all about luck management. There is plenty of luck to go around but it is not distributed equally all the time.
The say the market is irrational. True. But luck management isn’t.
It’s like a video game. Luck has its own rules and ‘levels of difficulty’. However, unlike a video game, the hardest level is the first one. After that it gets progressively easier and easier simply because there are fewer and fewer players left while the quantity of luck does not change.
There are two things to remember, though.
First is that everyone gets their chance. But the trick is we must wait for our turn. So, patience is paramount.
It’s almost like standing in a ‘queue’. But not the orderly queue you have, for example, in Canary Wharf in London at 5:15pm. It’s more like the ski queues in almost any resort in the Alps at 9:15am. We must make sure we manage our place in the ‘queue’ and, just like in a video game, do not drop out before our turn comes up.
Second, when we are up, we have to go for it. We must take full advantage of our luck so that we can get to the next level where there are fewer people in the queue and the luck-go-round is thus shorter. Just like a ski lift takes you up in the mountain and then there is another lift to go even further higher where there are always fewer people on it.
But to take that second lift, you must first take the time to become better. On the ski slopes you must have the patience to go up and down several times on the same run before you feel you are ready to go higher without breaking your legs on the way down.
I should not be saying this but it happens more often than people think: when you are on that lift, do not drop off by doing silly things.
What else? Oh yes, of course, the most important part. The bonus. No, not the bonus you are thinking of. If you are a good manager of luck eventually you should be able to hire someone else to stand in the queue for you while you go on and finally start to contribute to society.
Share the luck back. Give people a chance to play the game. It’s too late when you die, and it is not heritable. It’s the cycle of life.