Be Smart About How Lucky You Are



I asked a wealthy client about the beginnings of his fortune. As a child, he accumulated $600 through odd jobs and gifts. While in college in the early 1960s, he invested this savings into the stock market. By the time he got out of school he had multiplied his stake into enough cash to support himself for years, travel to Europe, and finance his first business.

I remarked, “Even in the go-go bull market of the 60s, that is an amazing return. You must have made some very smart investments. Why didn’t you continue onto a career in investing?”

My client is not a modest or self-effacing man, but he does see events clearly. He replied, “I did make some good investments, but I was smart enough to know I was lucky.”



Maybe this is why we use the same word, fortune, for both “chance” and “wealth.”



See also, The Lucky Rich on this blog.



The odds are that your worries are wrong

I’m an old man and I’ve known many troubles, most of which never happened.

–Attributed to Mark Twain

Randomness’s Large Role in Life



NYTimes: Psychologist Daniel Gilbert makes the argument that uncertainty – not knowing what misfortune will come – makes people more unhappy than misfortune itself. Do you find that to be true?

Leonard Mlodinow: It does seem to be true of (more…)

Be Cautious of Conceited Counselors

Stock Bubble

During the Internet bubble, I assisted with a large event for entrepreneurs by working the registration desk. It was busy until a few minutes after the speech began, a How I Did It presentation by an executive at a suddenly large dotcom.

One of the organizers said, “I can handle the late arrivals. Go in to hear the talk.”

“That’s okay,” I replied. “You go.”

“Don’t you want to hear it? He’s one of the founders!”

“Why would I want to hear him? All he can tell me is what he thinks is the reason it worked, but he doesn’t actually know. He got lucky but believes he’s a genius.”

Too many successful business people do not realize that being struck by lightning doesn’t make you an expert on electricity.

We all make thousands of decisions and take millions of actions. After assessing the results as a “failure” or a “success,” we attribute the outcome either to (more…)

Lucky, Rich Alumni



Chicago Booth Business School

The winners of the Distinguished Alumni Award at a top business school were asked, “What leads to success in business–a lucky experience or a series of planned decisive steps?”


Chicago Distinguished Alumni

These Chicago Booth graduates:

  • Broadway producer
  • Goldman Sachs COO
  • Harley-Davidson CEO
  • Morningstar COO

easily agreed:


It is luck.



Give yourself some slack. Success involves chance as well as virtue.



Luck plays a meaningful role in everyone’s lives.

–James Simons
#1 Hedge Fund Manager



Misreading Business



See it at Amazon!People are often surprised that I do not read popular business magazines, the latest management books, or eagerly attend speeches by top executives and successful entrepreneurs. I am certainly not knowledge averse; I read a great deal and love information. I am very interested in business and know a lot about it. Clients know that there is seldom an aspect of their enterprise I can not comment upon usefully. I just do not get my data from the usual sources.

I just came across an article in the California Management Review that explains one reason that reading most business journalism and executive memoirs is worse than useless. Phil Rosenzweig’s article, Misunderstanding the Nature of Company Performance: The Halo Effect and Other Business Delusions and his book shows that bad science and poor logic permeate the business press. Rosenzweig’s demolition of the over-praised Good to Great books is especially satisfying.

…it’s easy for pundits and professors to claim that someone blundered. Decisions that turned out badly are castigated as bad decisions. However, these sorts of judgments are erroneous, made retrospectively in light of what we know to have happened subsequently. These errors are surprisingly widespread in the business world. They affect not only journalistic accounts about specific companies, but also undermine the data used for large-scale studies about company performance. They lead to a broad misunderstanding of the forces that drive company success and failure. As we will see below, some of the most popular business studies in recent years are undermined by fundamental problems of data integrity.

strategy is about choice, and choice involves risk. There are no easy formulas to apply, no tidy plug-and-play solutions that offer a blueprint for success.