The Illusion of Control

Randomness and luck often distort our perception of skill and determinism, particularly in unpredictable environments like the stock market. Many individuals mistakenly attribute their success to expertise while blaming failures on external factors, giving rise to cognitive biases that obscure the role of chance. For instance, in a hypothetical scenario involving 10,000 investors with modest skills, about 200 might appear successful due to random occurrences rather than actual competence, ultimately leading to the misconception of financial genius. Recognizing the influence of randomness can recalibrate our understanding of success and failure, allowing for a more nuanced analysis of our decisions.