121: Michael Mauboussin – Tactics for Better Decision Making, and Skill Versus Luck
Chat With Traders
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The Effect of Luck on the Short Term
In the short run, luck and very often dominate, but over the long haul, luck nets to zero in many cases. The errors canceled out as the sample expands and it distills down to the skill that's there. If I flipped a coin 10 times, for example, you wouldn't be shocked to see seven heads and three tails,. But if I flipped it 100, 1000, 10,000 and a million times, that we would converge toward that 5050 ratio.
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