How Much of Your Success is Luck and How Much is Skill?

ptm24's picture
Rank: Senior Orangutan | 443

Title says it all. There are plenty of discussions on here about the value of luck vs skill, so for you personally, what percentage of your success (or lack thereof) is due to luck and what percentage is due to skill?

Comments (69)

Sep 10, 2018

Do not trust anyone who refuses to admit that part of the reason for their success is sheer, dumb luck. Some people are born on third base and think they hit a home run.

Luck comes in many ways. I'd say it's honestly 60% luck, 40% effort. But the harder you work, the more chances you have to become lucky.

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Sep 10, 2018

I agree with this entirely. Someone once said that the harder you work, the more lucky you are. This is all kind of a version of Hanlon's razor (never attribute to malice what can be attributed to stupidity) - never take credit for what can be attributed to sheer luck. Put in those terms, how much of what we do is ever really ours to claim credit for? I think it's less than some people like to imagine.

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Most Helpful
Sep 11, 2018

Not sure I agree that it's 60% luck 40% skill.

It might be 100% luck 100% skill.

A lot in life is right time right place right person.

Entire generations of tech billionaires came of age at nearly the same time. Do you think it's a coincidence that bill gates and Steve jobs were born in the same year? The guys who made their money on basically personal computers? Granted jobs made his real money in his second act but he cut his teeth on the personal computer. Having the right industry breakthrough at the right age is entirely key.

A few years ago I saw a chart of great investors and when they were born. David Einhorn was the last one. Two sigma is like the last great hedge fund to be founded. Do you think Ken griffen could create citadel today... out of his Harvard dorm room trading convertible bonds? No the easy edges he used to build capital don't exists today. Which means instead of being founder he would be an employee. A lot of these businesses went from being an art to institutionalized so the artists and founders no longer exists. They went from future billionaires to well-paid professional work. What happened to the great "value" investors? Their edges got eaten up by smart beta and quant funds. I can't even think of the last time I heard the term "star" trader was it Greg Coffey at glg a decade ago?

Same thing in private equity. All the famous founders are old men now. A good pe deal in the '80s did 20-30 tines coc returns....now 2.4 times.

I'm fairly certain all of the great ideas in finance have been institutionalized.

I think zuckerberg would have been a rich man in any generation. But perhaps not a famous founder.

It's not 60-40. And many legends are not gods. Right time - Right Person - Right Place

To a large extent I think you need all of those factors. Something big doesn't happen without all of those and it's not like you weight one factor as more important since they exponential build on each other.

I go back to mid 2000's in Chicago trading. It was not uncommon to meet a kid from duke a couple years out of school trading pulling in 10-20 million a year or a kid from Princeton ten years out of school with him own firm worth a 100 million or a hustler from Uic in the business 7 years with 30 million. And they may have started with 50k. But their edges are gobbled up by the quant firms now or to some extent central bank induced tranquility.

Point is right time right talent is hugely important. It's hugely important to get into a business while the margins are huge.

I think a lot about where I think the next land rushes will be. Most of the finance related "real estate" seems institutionalized and turning into highly paid professional work. Everyone wants bitcoin to be that but I'm not a believer. I would guess something in fintech works out well. Blockchain I still here a lot of mixed reviews. The way average guys made huge money in pharma seems dead ("price hike strategy on old tech") but there's probably always a new game in healthcare.

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Sep 11, 2018

Agreed completely. If I look at the most successful people I know of through friends and family it has been the people who have started firms before institutionalisation has occurred. I think for Finance the ship has sailed for everything sadly.

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Sep 11, 2018

Agreed, nice write-up, +SB.

Seneca (supposedly) said, "Luck is what happens when preparation meets opportunity." There will always be opportunities to identify nascent industries/lines of business if you keep yourself sharp and in the flow.

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Sep 14, 2018

This is awesome and a really great perspective on the times, I completely agree with you. The huge success and riches comes before the edge/opportunity becomes commoditized and gobbled up by preppy ivy school types because what else are they going to do with their lives

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Sep 16, 2018

Great write up. I've been thinking about this, but I've never quite articulated it this well. I still think there are some opportunities in overlooked areas of the equity markets, but they just aren't as plentiful, of course.

Sep 16, 2018

Malcom Gladwell talks a lot about this in his book Outliers. For example, Bill Gates at a young age of 11 was able to get access to a local Universities Computer. So the dude was basically programing before he even reached puberty.

Sep 11, 2018

In the book "Talent is Overrated" the author argued that skill what is important.
And that skill is gained through strategically designed practice, repeated often.
The argument is that natural talent is nearly irrelevant, and that it is possible to develop almost any skillset, if one applies thoughtful practice.
So if that concept is true, then one can attain a high level of skill which itself would deliver success.
Hence luck wouldn't matter.
I'm not stating that the above is something I 100% subscribe to, but it is an interesting concept as applied to OP's original question.

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Sep 12, 2018

Natural talent gives you more opportunities to develop skill early on

Sep 14, 2018

Sooooo true. God seems to reward the prepared.

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Sep 10, 2018

Around 50/50 - but as said above, the smarter*/harder you work rather non-coincidentally the luckier you get I've noticed.

The other aspects of luck include good timing on opportunities, having the right connections at the right time, etc.

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Sep 10, 2018

A portion is luck for sure but I wouldn't have been able to take advantage of the opportunities Ive lucked into if I didn't work my ass off to develop the skill set I have.

IE starting company X didn't look like an opportunity to most people but it did to me because I had spent time in the trenches to really learn the industry.

Sep 10, 2018
m_1:

A portion is luck for sure but I wouldn't have been able to take advantage of the opportunities Ive lucked into if I didn't work my ass off to develop the skill set I have.

IE starting company X didn't look like an opportunity to most people but it did to me because I had spent time in the trenches to really learn the industry.

What's your age range and pre-entrepreneurial background?

Sep 10, 2018

Outlined it in a thread in the other industries subforum

Funniest
Sep 10, 2018

10 % luck, 20 % skill, 15 % concentrated power of will, 5 % pleasure, 50 % pain and a 100 % reason to remember the name.

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Sep 11, 2018
Aleksandr-Sm:

10 % luck, 20 % skill, 15 % concentrated power of will, 5 % pleasure, 50 % pain and a 100 % reason to remember the name.

Brilliant. SB to you, and I'd give you 10 if I could.

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  • HFT
  •  Sep 11, 2018

One of the few raps, I have heard that provides a kind of positive motivation/message.
Mostly these days, it's do this coke, shoot that up, and all other crap.

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Sep 11, 2018

Does not add to 100% plz check model and fix thx.

Sep 12, 2018

I think it does tho, add to 100%.
The first 5 variables sum to 100, and the final 100% is a restatement of the afore calculation.
But then again, I have a learning disability and suck at math so,...

Sep 15, 2018

Well done. Very very well done.

Sep 10, 2018

Kind of a bullshit question, IMO.

Luck is just a concept that can be applied to pretty much everything, it pervades everything in your life. The only reason you have any of your skills is because you don't have downs and weren't a blowjob.

I think a better question would be more along the lines of 'how much of the deciding factors of your life were pre-planned and achieved vs came to you out of the ether as black swan events?'

In the end we're never going to know, and we'll never be able to control external factors for better or worse.

All my success is 100% skill that I got by luck.

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Sep 11, 2018

Edited

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Sep 11, 2018

I'd say 85 % chance and 15 % skill.
I like the idea someone presented on this forum about life "as a market". Most of your success is due to beta. More than a few of my friends from middle school and high school ended up in banking or other finance roles and I don't see myself as some prodigy. I took the chances that were given to me and it certainly didn't come without work, but don't think I could have made it if I was born into poverty.

  • HFT
  •  Sep 11, 2018

70% persistent effort towards a clear set goal/dream, 20% raw drive to live a good life and 10% sheer luck.
May vary for different individuals.
Just my observation.
Thanks

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Sep 11, 2018

Didn't you post a "Failure AMA" just yesterday?

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  • HFT
  •  Sep 11, 2018

Yes, and how does that relate to your comment? I guess that you may be wondering if I had a setback in a path to so called "success" which is determined by society and culture, how can I write of success?
I consider myself to be a human and spiritual success.
And no setback is final, I WILL bounce back in my career of finance too. Wish me luck.
Your comments are welcome.
Thanks.

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Sep 11, 2018

Not sure but the more skill I have the luckier I seem to get.

Sep 11, 2018

Honestly, for 98% of smart/intelligence people it's mostly luck.

But for a select few people that I've met, they would probably be in the same position no matter what, i.e. savant types like Terence Tao.

As someone part of that 98%, I think luck is about 60-80% of it.

Sep 11, 2018

I think it's 90%+ luck. I've worked hard for what I have, but I'm not going to ignore the fact that I was born into a family that valued and enforced academic achievement, was raised in a safe suburb, and didn't have to pay for college; all things that are outside of my control.

I can't say for certain I would have what I have now if any one of those things were different, and I really think more people need to take a look at their own advantages before telling the poor that they just need to "work harder."

There are people who work a lot harder than I do who still have a lot less.

Sep 11, 2018

This is something I've been pondering lately (btw I dont think there's ever a real answer unless someone hits some sort of lottery).

I've now achieved some level of success in Corp Fin that some would admire. I come from a middle class background, was an average student, went to a crappy school, but sort of made it. I attribute my success to:
- A few key decisions: 1. realizing I was going to get a shitty job out of my undergrad and going to grad school and 2. A semi-risky career move leaving a stable job in a pharma company for a potential of more upside in an industrial company (both F500).
- Hard work and reliability. I am NOT a 100 hour a week guy, but I am a hard worker and I am 100% reliable. Example - I left at noon on Friday, but something popped up over the weekend so when the kids went to bed on Saturday night I spent an hour taking care of it. My last boss said that my position was overpaid for the hours and work I did, but that he needed someone that could take care of anything that would come our way and be 100% reliable - that is me.
- Smarts. I am no genius, but I am intelligent and pick things up fairly quickly. In Corp Fin we don't need rocket scientists, just guys relatively smart that can get shit done. Again, fits me to a T
- Personality. I'm not overly outgoing, but pretty easy to get along with. My bosses really like me (most important) and coworkers and employees seem to like me too.
- Asking for what you want. This is where I think a lot of people fall short in Corp Fin. After 6-12 months of good performance I sit down with my boss and ask for feedback. When that feedback is good, I follow it with "my goal is to be promoted after this roll, is there anything you see that would hold me back from that". This hasn't failed me yet.
- Luck. There is certainly luck involved - having a good boss, right place/right time, risks paying off, etc... but after much thought, I'm still not sure what % I'd attribute to luck

twitter: @CorpFin_Guy

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Sep 11, 2018

This is ten percent luck, twenty percent skill
Fifteen percent concentrated power of will
Five percent pleasure, fifty percent pain
And a hundred percent reason to remember the name

What concert costs 45 cents? 50 Cent feat. Nickelback.

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Sep 11, 2018

75% luck 25% skill

Sep 11, 2018

50% luck, 30% skill, 40% SEX DUNGEON.

Sep 11, 2018

luck is preparation meeting opportunity

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Sep 11, 2018

Well, I was born in America so I already won the lottery and am very lucky. That's gotta be at least 75% of my success right there.

Sep 11, 2018

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Sep 11, 2018

Mostly just dump luck.

Barely got into my major, fucked around there, and got hired during a very booming time. You could be in coma and still get hired.

Then said industry took a very ugly hit, and no-one hired anymore. Got into Business school due to work, and from there things rolled further.

Basically, if I were to repeat what I did, I would absolutely not manage to reproduce the results. So, probably 80% luck / 20% hard work.

I see fresh grads with 3.3 and up GPA's, leadership experience, internships, and what not trying to land the same jobs that I stumbled into.

But you know what? That's just how it is. During bull markets and industrial booms, companies will hire anyone that breaths, as long as they have the correct diploma. And once you're in, you can play your cards to your best advantage.

Unfortunately, a lot of things in life boils down to having the right background, at the right time.

We're kinda going through the same thing in data-driven industries today, where anyone with a couple of classes in programming, statistics, machine learning, and math can land very lucrative and "hot" jobs. You could be dumb as a rock, but companies are desperate...Once you're "in", the only thing you need to do is not to fuck up too badly.

Sep 11, 2018

I also think that having the right upbringing and family goes directly under "luck". If you had well-off parents that pushed you through school, hired private tutors, sent you to prep-school, then that's a boatload of luck from your side - even if you didn't apply yourself - but also great planning from your parents side.

Or maybe you grew up with supportive people around you, people that cheered and complimented you, in essence boosting your confidence. That's also luck from your side.

It's basically like being given a treasure map, with a big fat cross where treasure is hidden, and a dotted line that leads to said treasure. Sure, you have to walk the distance yourself, and do the digging once you get there, but you're still in a much better position than someone who were just dropped off on the same island, and given vague descriptions "Maybe it's over there, or over there, who knows. You gotta find out yourself".

I think very, very few people are 100% "self-made", and no mater how spoiled or coddled a person is, they did do something themselves. So it's not a binary case, but more on a spectrum. The likelihood if a person succeeding in life def. depends on many socioeconomic factors. And that involves a ton of luck.

Sep 14, 2018

Yeah, most successful people aren't self made in the slightest - we, as a society, just love to over-romanticize the exceptions who are.

Sep 16, 2018

100% makes a huge difference. It's too bad so many people are delusional about this or outright insecure about admitting it.

Sep 11, 2018

In terms of success, I want to separate business success from investing success, and focus on the latter. The reason for that is I've been spending a fair amount of time reading stuff from Buffett and Howard Marks on investing.

The overriding message that both of them proclaim is that there's a lot of luck in being successful in investing over the long-term, but the biggest differentiator is not doing stupid things when everyone else is. In other words, we only get a certain amount of great ideas in a lifetime, so success is based on being able to recognize and act on great ideas, and then avoiding all the other crap in between.

I find this wisdom to be extremely counter-cultural in type-A environments in finance where everyone is trying to justify their existence by being busy all the time. Ironically, it's the pressure to do deals/make investments/deploy more capital mantra that ultimately results in returns becoming average or downright lousy. Fortunately, you don't lose your job by making the mistake that everyone else makes, but it's what'll prevent you from becoming one of the greats.

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Sep 15, 2018

There are no greats anymore. Name an investor under 50.

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Sep 16, 2018

Bill Ackman was billionaire HF manager at like 40. David Einhorn is only 49 and has been around forever.

  • ij29824DE
  •  Sep 11, 2018

I wouldn't say "Skill," but rather, "Hard Work" or simply willingness to grind. In high school, I signed up for some courses I definitely didn't think I could handle (AP Chem in 10th grade, AP CS in 10th grade despite not knowing how to code) - simply approaching these ostensibly impossible with a growth mindset allows for great things. Just think about it this way: holistically, what you are about to undertake may seem difficult, but just take it step by step, quiz by quiz, lecture by lecture, and STUDY.

to answer your question, probably 40 luck/60 skill

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Sep 11, 2018

In my case, it's 99% luck, 90bps personality and 5bps of skill.

PS. If I had 10bps of skill, I'd have stayed in rates instead of switching to vol

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Sep 12, 2018

Haha! SB'ed!

Sep 12, 2018

I think certainly you can make a conscious effort to put yourself in the places (locations, around the right people etc..) that increase your chances for success.. hard work will always be required unless in the rare case of pure nepotism.

Sep 12, 2018

Every skill you acquire doubles your odds of success. Scott Adams

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Sep 14, 2018

This is ten per cent luck, twenty per cent skill
Fifteen per cent concentrated power of will
Five per cent pleasure, fifty per cent pain
And a hundred per cent reason to remember the name

Sep 14, 2018

I think about this a lot. If we limit the consideration to career success (and making money), then I would say it generally boils down to 70% luck and 30% skill/hard work. Luck is an essential element to any success story out there, and anybody who claims otherwise is likely drunk on his/her own ego. Sure, some luck can be manufactured through skill and hard work; but there are limits to that.

There is likely a distribution in the mix of luck vs. skill/hard work that equal success. I struggle to identify a success story that is 100% attributable to skill/hard work and no luck at all, while we can all point to a few examples of complete buffoons who are multimillionaires for which nearly 100% of their success can only be attributed to blind luck. Personally, I just work hard and continue to learn every day in hopes that I make myself essential to others. However, I have to acknowledge that my paradigm could change due to factors outside of my direct control at any time such that skill and hard work are no longer enough.

Sep 14, 2018

Mostly luck, the long tail is then hard work, determination and grit.

Luck determines your intelligence, where you're born, who you're born to, what kind of opportunities you have in life, who you meet, what you end up learning, etc etc. Once the opportunity set is there though, you have to be prepared to seize it and run - not everyone can do that.

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Sep 14, 2018

fellatio is 95% skill so mostly skill i'd say

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

Sep 15, 2018

95% assuming some base level of intelligence. Being born in the DR of Congo over the past couple of decades versus the US is very different in guaranteeing some level of success between war and disease (Ebola and Aids). It's not really comparable, and you have zero control over where you are born.

Sep 16, 2018

Guess it would depend who you ask. I might say 50/50 but as I sit an think, I go back an forth on my answer.

I have one friend who looks at my situation as pure luck because I got my job offer after a flight cross country.

The other friend chooses to look at it as the right place, right time, but because of my hard work I was able to showcase myself in that situation.

Sep 16, 2018

So much luck, but also risk taking. I stepped into a seat two senior people said no to simply because they thought they were being put there to take the fall. I was young and took the opportunity.

To them, it was entering the game in the last minute of the 4th QTR, last day of contract, while being on the bench for the past 5 months. Mess up, you're done. Succeed, stay alive.

To me, it was bottom of 9th, 2 outs, 3 people on base, down by 3. Go in for the grand slam.

I hit it, and moved up.

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Sep 20, 2018

I prefer the term, "When hard-work meets opportunity".

Sep 20, 2018
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Sep 25, 2018
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Not too high, not too low

Sep 25, 2018
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