Luck Is Not Real

I will share an extremely unpopular opinion – we LOVE the financial news channel CNBC.

We bet you have not heard anyone say that in recent years!

The strong consensus view is that the financial media is, at best, "noise" and, at worst, extremely biased. We don’t necessarily disagree.

Over the years, though, we have learned to use CNBC as a market barometer. We are seldom interested in the opinions expressed but in the volume of the views expressed and on what subjects.

We have successfully used that for decades to help with trading around the stock market's short-term moves.

They often also have really good guests. There are a lot of smart people out there with great insights, and CNBC gives us access to some of that wisdom.

Earlier this week, they had entrepreneur and sports/crypto commentator Anthony Pompliano, or as he is known, "Pomp," on the show.

I am not that familiar with his work as we spend most of our time in stocks and commodities, but I have also been impressed with his optimistic outlook.

He had some great insights, and you can watch the video of his appearance here -

He said one thing that stood out for me. He made the statement, "Luck is not real."

Here is a brief review of his logic…

He points out that luck is a purely psychological concept. It is about our perception of what has happened in the world around us.

He uses the example of two people in a similar car accident. Imagine they are severely injured and lose a limb.

One of the injured people might sit in their hospital bed and think to themselves how “unlucky” they were to be in the accident and lose a limb.

The one next to them might be thinking about how “lucky” they are to be alive.

They both have been through the same experience but have a completely different perspective on what has happened.

Pomp further points out that research shows that people who consider themselves lucky are likely to have better outcomes.

Pomp is right. We spend a lot of time writing about the power of psychology and optimism in investing and life.

If you have a positive outlook, you are in a much better position to learn from and deal with failure.

Instead of being “unlucky,” you have an opportunity to improve your future outcomes.

This comes back to one of my favorite concepts – we make our OWN luck.

In his conversation, Pomp discusses how luck is really related to probability. Probability is not a psychological concept but a mathematical one.

It is also the concept that underlies our strategies for TRADING and INVESTING.

We work to identify opportunities with a high probability of making money.

An unsophisticated observer could see our returns and say we are very "lucky.” We win at a much higher rate than would be random and outperform the stock market averages.

We argue that we make our luck by having a process to identify those opportunities.

Embedded in that process is also the idea of continual improvement and evolution. We actively identify mistakes made in our losses and work to eliminate them. We look at our biggest wins and figure out how to maximize them.

We believe that our process works and that it can always get better. One could say that we are very "lucky” …

This is a great perspective not just for the markets but also for life!