Investing: Hardwork, Luck And Black Swans

Separating Skill From Luck

From time to time, I would find similarities between investing and life experiences. I believe this holds true for many others, just that it may require some form of introspection to actually draw the link. That said, I do feel that the lessons learnt from investing can be largely applicable to real life scenarios. This is partly why we find investing very intriguing. This article is nothing technical but just my personal thought process.

Recently, I have just completed my Final Year Examinations after spending roughly 6 weeks preparing for it. Finishing it, I spent some time thinking about it and found many similarities to that we experience in the stock markets.

Many investors ask this question, “Is Investing Luck?”. The standard response would be no. We all have to do our due diligence with regards to investing. Solely depending on luck would not be able to really bring you anywhere. While I would largely agree that hardwork plays an important role in investing and many aspects of our lives, we cannot deny this element of luck involved. While hardwork was able to help me prepare for most of my examinations, there were some that I have to admit that I had been really lucky. Perhaps with the hardwork put in I would have still been able to solve the question, however, that is still something debatable given that my state of mind would have been put in a state of shock first from the unforeseen question. Be it my friend asking me a question from a past year paper, making me realise that I had not attempted it and the professor actually setting most of the questions based from that paper or for another module, where I only studied for a couple of case studies out of the very many and the professor setting the exact same case study that I studied for. All these were the luck involved in the midst of my examinations.

Therefore, I would say that luck does play a role. However, in the long run, over thousands of investments or exams, the skill would outweigh the luck component. In some way, this reminds me of a quote my teacher taught us and how I have seen many things in life.


Essentially, this would translate to, 70% hardwork with the remaining 30% left to fate. In life, there are so many things we can try to control for, however, can we truly control for everything? There would always be those unforeseen contingencies and zero probability events that would occur, which are totally beyond our control and calculations.

With this, it brings me to my next point on Black Swans. Such events are zero probability events, which we can never predict when it would occur. Like in my examinations, there was an incident where the professor decided to go all out harsh by setting PHD-level questions, coupled with questions that required knowledge from other optional modules. Such events are events where no matter how much hardwork would too be unable to help you and the majority would probably be severely affected like yourself.

I spent the whole term training in martial arts; I thought I would face a strong opponent in the exam so that the judges can assess my agility, strength and skills. But when I walked into the exam hall I saw DARTH VADER WITH A LIGHTSABER!

An analogy by a fellow coursemate

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About the Author

SG Value Investor
I developed my passion for investment management especially equity research at a relatively young age. My investment journey began when I was 20, at a point in time where markets were still recovering from the Global Financial Crisis. My portfolio started from money I saved over the past years and through working during the holidays. I was fortunate to have a good friend with common investing mentality to began my journey towards value investing. To date, we still research and invest in companies together, discussing valuations and potential risks of a company. To date, I manage a fund with a value investing style. Positions are decided upon via a bottom-up approach or smart speculation (a term I came up with when buying a stock for quick profit due to a mismatch in prices in the market due to takeovers/selling of a subsidiary or associate). Apart from managing my own portfolio, I enjoy sharing my research with family and friends, seeking their opinions and views towards the stock. Reading Economics in London, I constantly keep up with the financial news in Singapore & Hong Kong. Despite my busy schedule, it has not stopped me from enjoying other aspects of life. I enjoy a variety of activities in whatever free time I may have – endurance running, marathons, traveling, fine dining, whiskey appreciation, fashion. Lastly, I enjoy meeting new people, discussing ideas and gaining new perspectives towards issues in the world.

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