[FRIAM] Nautilus: Investing Is More Luck Than Talent

[Steven A Smith]

Robert -

> I am glad to have found the FRIAM forum--thanks to Steven Guerin--as 
> it so often has an array of viewpoints that come from a variety of 
> learned backgrounds and borne up by interpretations from a variety of 
> news sources. In spite of these differences, the forum threads remain 
> very congenial toward exploring a variety of contemporary topics.
It is a good, if unexpected forum for this class of conversation, given 
the formal agenda of "all things Complexity".  I agree that the 
learnedness, the congeniality, and to a moderate extent the 
international constituency truly makes this a valuable forum.   I am 
always glad when "yet another" voice weighs in here.   I know of a few 
who have been driven off by some specific collective failing, or a 
singular snag in the discourse, but for the most part, I think we have 
as good of a cross-section of points of view, at least from "the learned 
elite".   I have other, better sources of input and discussion with "the 
man on the street", including in a few cases, internationally.  I truly 
appreciate this aspect of the globe-spanning communications network that 
didn't truly erupt into it's modern glory until about 20 years ago!
>
>     I wanted to respond to the original subject of the thread which I
>     apprehend as the question of pre-determination vs. free will.  But
>     that was too hard of a "good question". 
>
>
> That's an interesting way of putting it. But, I see the original topic 
> as a question of skill or talent versus luck in the game of economic 
> strategies.
I was probably responding to Marcus' statement that "it is all 
physics"...   which carries a pretty strong flavor of predetermination, 
or more to the point, deterministic if not predictable (see: Godel's 
Incompleteness).    I have struggled mightily with the skill/talent-luck 
duality in my life.   I think the truth is somewhere on the hairy edge 
of complexity.   I've seen people with skill and talent fail miserably 
and others with little fly high in some games.   I don't know how that 
plays out, for example, in elite fields of scientific study...  I don't 
think Luck alone ever leads you to be an Einstein nor a Feynman, up to 
of course, claiming that it was luck which lead them to their natural 
talent and drive which lead them to their skills.  At that level, I 
suppose it is "all physics"!

> Pre-determined would be associated with the idea that sufficient skill 
> will bring reliable economic gain. The corollary is that if you do not 
> win, you are not skilled enough and therefore not as valuable to 
> society.  This is the underlying concept in *Human Capital*: Labor 
> conceptually turned into Capital, such that education and training are 
> not represented in the cost of goods sold (COGS). That is up to each 
> individual to make themselves more valuable to the consumers of human 
> capital: the capitalists.  It sounds reasonable on the face of it, but 
> it has the tendency to sort society in the same way as luck does in 
> the investment game.
My own modest success in life seems to be as much a product of  luck as 
anything and it IS hard to sort my own "luck" from my "talent"...  my 
adeptness at mathematics, subjects based on mathematics, and in the 
language arts seems to be rooted more in my natural curiosity than 
anything else.   While my friends were trying to get better at heading 
and heeling calves from horseback, I was writing poetry and mastering 
fractions...   I still learned to ride (and rope) but wasn't as 
satisfied with that as a lifelong passion as I was with readin', 'ritin' 
and 'rithmatikken.   I haven't been on a horse in decades but still feel 
the visceral pleasures of having once been a centaur for a few hours now 
and then.   Looking back, maybe I wish I had spent my life on a horse 
rather than in my books...  either way, is that "luck"?
> I think you are associating the free will thing, then, with luck ... 
> or, better, non-determinism.  Free will is certainly about choices, 
> but it is the source driving the outcome of those choices that is of 
> interest to the original subject. Is is skill or chance ... with just 
> the illusion of free-will being at play? The /Nautilus /article is 
> suggesting that we delude ourselves into thinking that we had anything 
> skill-wise to do with the outcomes.  This is not an intuitive 
> conclusion. But, if true, shouldn't it affect the way we regard any 
> tax policy or each economic policy that affects access to possible 
> prosperity for individuals--adjusting the probabilities of the game?  
> In the context of the Human Capital trope, access to effective 
> education and training could be where we would look to "taxing" the 
> lucky to benefit the "unlucky." Who should do this: the public or 
> private institutions operating on public infrastructure? It's a 
> thinker, especially since multi-nationals are the big players these 
> days ... that was the gist of the RT segment.
I, long ago, decided to treat this topic as if "for others" it is luck, 
but for me it is skill.  I don't mean that I take credit for my 
successes and chalk others' up to luck, but rather that I pursue my own 
"luck" through development of what I feel to by my natural talents into 
more advanced skills, but when someone else lacks a skill or talent or 
circumstance, I accept that their lack might be "the luck of the draw".  
When I came to this, I left my sympathy with the conservative (more 
libertarian than republican) apprehension of the world and moved it 
quite a way  to the left. Bernie was my man, Jill got my vote, Hillary 
got little more than a big groan out of me and Trump gets everything 
short of stark-raving disdain from me.   And I helped Reagan defeat Carter.

What goes around, comes around.

- Steve

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