Aaron, how can I become one of the really lucky people? Is it something like "the harder I work, the luckier I get" or is there a shortcut? P

"How can I become one of the really lucky people? Is it something like "the harder I work, the luckier I get" or is there a shortcut?"You are already very lucky. Same goes to all of us. PS It's Thanksgiving Day.

Aaron, how can I become one of the really lucky people? Is it something like "the harder I work, the luckier I get" or is there a shortcut?P >>No shortcut or longcut, I'm afraid. "We call predestination God's eternal decree, by which he determined within himself what he willed to become of each man. For all are not created in equal condition; rather, eternal life is foreordained for some, eternal damnation for others" (John Calvin, Institutes 3. 21. 5). How you act has nothing to do with it. If you are lucky, you will know it because you will be lucky enough not to be tormented by questions like, "how do I get lucky?" You'll be too busy enjoying yourself. If you ask, you aren't. Sorry.

Roadkill, you should be a lawyer. Your sophistry is superficially plausible, yet absurd. I'm convinced that most successful traders (i.e., liquidity providers) are lucky in that many people could and would do their jobs for 1/10 the pay. Many of them are given valuable 'seats' that make their position valuable regardless (or in spite of) what they do. They are paid a lot because of a barrier to entry in the form of a learning curve. Even though they are replacable, it would be costly for their employer to do so: the company would lose $X due to downtime, and potentially more if their successor is not proficient (even these straightforward jobs are not idiotically easy, a substantial fraction of new traders actually never master it--say 50%). I know a lot of guys who have made $500k to $5MM even though I knew many people could do what they do and were being paid under $100k. For example, I worked for a bank where the head swap trader was really just a swap pricer and hedger, and made $5MM basically building curves, constructing Eurodollar hedges, and running a FinancialCAD spreadsheet. His boss was an old dopey guy (common to commercial banking) who thought he was an alchemist, but he was simply pricing floating rates notes for bank customers who wanted to convert fixed to floating loans and vice versa. When he left he was replaced by a very average fellow who made only $200k, and the desk's P&L didn't suffer. The desk took in over $25MM, so given the big boss's ignorance, you can empathize with the boss's initial reluctance to ask him for a lower payout (which prompted his short-sided departure). Also, note all these guys in their 20s who made over $1MM for some investment bank in London or NY, and a few years later show up in risk management or something making far less--is their marginal product of labor so much lower or random, or were they lucky? In addition, many traders follow the maxim 'turbid waters run deep', and so complicate their activities all to make their value-added appear more significant than it is. A manager who makes the mistake of letting a truly good trader mad (or pouty) can lose his job, while saving money by replacing him doesn't give him symmetrical upside, so all traders learn the art of affectation.As for investors (as opposed to dealers, market makers, etc.), there I think you have different forces going on. Diseconomies of scale make everyone average eventually. A good equity analyst is given just enough assets to manage that one is indifferent between him and an index fund; this is rational for the equity analyst and the outside investor. It is predicated on the existence of skill, and though there's sufficient noise to make any investor's skill only probable at best, if you assumed no skill in investing you would have to believe there is a massive, persistent and pervasive disequilibrium situation in the world where investment professionals exist. The bottom line, however, is that even good investors need to be lucky, or at least not unlucky, in order to be revealed. More fundamentally, the necessity of luck to be a successful investor is no different than the role of luck among successful TV personalities, journalists, politicians, mid-level managers in large corporations--even academics. How many really smart guys get stuck in infertile academic threads, which ex ante seemed to have just as much potential for success as those that blossomed? Who knew in 1990 that the arbitrage pricing theory, dynamic macro modeling a la Stokey/Lucas/Sargent, or the small cap effect, would be dead ends? Who in 1990 thought HJM would be so successful? Sure there's some skill involved in choosing the right problem, but if you're 22 and overwhelmed by learning new mathematical tools in grad school, a lot of this is determined randomly by people thrust into your life. I bet Isaac Newton or James Maxwell would be only modestly successful, as opposed to wildly successful, if they were born 50 years ago.

You're probably right. Almost all successful people in any field have talent, but there is more talent than success. Your analysis of traders is similar to that of a movie star. Yes, you could save $5 million of a $100 million budget by using a no-name instead of a star; and the movie might be just as likely to be good; but 5 percent is not a lot to pay for a known quantity. You could replace every movie star today with a new face and the average quality of movies wouldn't suffer. Actors are talented but talent is cheap.

"We call predestination God's eternal decree, by which he determined within himself what he willed to become of each man. For all are not created in equal condition; rather, eternal life is foreordained for some, eternal damnation for others" (John Calvin, Institutes 3. 21. 5). Interesting paradox, in sense of human modernization we tend to glorify the harmless seven sins (most of them). On the other vision of this paradox, I can read the ancient quote of John Calvin - Christian theologies (1509-1564). The question is the caption of the actual thread, "does all traders all fool by the luck?" To my humble knowledge the answer is neither "yes" nor "no", however, it certainly not a determination of God or the willed of man. Otherwise, a man can walk along the street feeling very lucky and squash by a motor vehicle. We called it self-deception.From an eagle view, we can consider ourselves as luckiest compare to the population of Afghanistan, Iraq and those of other totalitarian regimes. The socialists among us may sense it an unfair world, but why? Even so, why most traders are not lucky and few are. Moreover, why amid those few luckiest only few of them will enjoy the long term benefit and prosperity. The answers of these questions arrive with the leap in the cognitive and biology science, as follow: In order to create an accurate portrayal of the world (presenting information to the self-consciousness), of the human nervous system, according to certain observations. It had been already proved that the nervous system use self-deception to adopt solutions to problems that may been unexplained to our rational conscious. Thus, when a person asks how could he or she reaches the same wealth of Bill Gates or Warren Buffet. This is a classical self-deception that we all use in a way or another. According to these theories, self-deceptions have been adaptive by our ancestors as a natural choice at their own time. Furthermore, it served them as it serves us today to maintain an adoption level of self-esteem ([see Gur, R. & Sachiem, H. (1991) Self-deception: A concept in search of a phenomenon. Journal of Personality and social Psychology, 37(2), 147-169).Fortunately and unfortunately, our ancestors endowed us their biological genes, so whether we like it or not we are prisoners of our biology. However, thinks about those criminals' thieves and murders whose lives in the prisons. How many of them really plan to contrive a means of escape from prison. There was an inside research that the potential prisoner with the high level of intellectualism with risks acceptance is the ones who tend to escape. However, how do we associate between biology and success in the financial markets?The dogma of Bachelier in the theory of speculation is an excellent parallel to the development and discoveries in the evolution theories. While Darwin enjoyed the gratification of his triumph, Jean Baptiste de Lamarck endured ridicule and obscurity. Darwin's theory and Lamarck's theory actually opposed each other in their diametric logic. I assume that we are all familiar with Darwin theory of "natural selection". On the other hand, there was Lamarck theory of "transformation arising from the organism's own experience of the environment". It requires a conception of the organism as open to the environment, which it actually is and invites us to examine the dynamics of transformation, as well as mechanisms whereby the transformation could become `internalized'. Hence, it leads logically to the epigenetic approach, which embraces the same holistic, systems thinking that Lamarck exemplifies. (see Burkhardt, R. (1977). The Spirit of Systems, Harvard University Press, Cambridge, Mass). Likewise, the Neo-Darwin theories demise with the time when new observational and mechanical methods refuted the premises behind the theory. Thereafter, the pseudo-Lamarck theory vindicated its assumptions. In other words, the pseudo-Lamarck theories confirmed that heredity and evolution of genes are part of dynamic process. Likewise, the organisms are complex with nonlinear dynamic system, but cannot be separate between its evolution and development (biology/ organist mutation). Furthermore, this epigenetic landscape has explored mathematically in great detail since, and its evolutionary consequences made explicit (see Saunders, P.T The organism as a dynamical system. In Thinking About Biology). The aim of comparative psychology is to discover the similarities and differences between phylogenetic levels in how behavior is organized. Let sum all these samples of biology into deterministic chances. First, we carry our ancestors genes whether we like it our not. Second, the evolution process is dynamically change by initiate development, thus our biological and social system integrates into a functional structure. In other words, experience adopting new formations (learning curve) does create the change in our biological system. However, there is a paradox here, a high level of intellectualism usually accompanied with extended risk aversion. Such as, financial quants are sufficient risks averse. The most sharpness and rudeness example given by Larry Ellison at the graduation ceremony at Yale University, as follow:"Finally, I realize that many of you, and hopefully by now most of you, are wondering, 'Is there anything I can do? Is there any hope for me at all?' Actually, no. It's too late. You've absorbed too much, think you know too much. You're not 19 anymore. You have a built-in cap"Therefore, observing the epigenetic paradox of estimating the learning curve of success and survival is definitely not relate to absorb into lectures, books, etc, just by accepting risks. However, the better the look into the prospect of risk experience and relevants odds, the better the understanding. The contrivance is a result of heuristic process, however, it need the guts to implement the process in real life. Thus, I can build an outstanding trading system with 75% odds in my favor, indeed, many brilliants minds can do the same, but having the guts to fulfill this trading plan, only very few may enjoy both. In very simple words, organic mutation and development in human biology have barely a fraction to do with wearing the mortarboards on the heads from the academia. Nevertheless, it really isn't necessary to dropout from college, as Larry Ellison advised, merely understanding its significant limitations on the personal development. So, in reality, if we take a cohort of 100 competent students and giving them the choice of being like Larry Ellison or let say, the Noble Prize Laureate - Robert C. Merton. The result of the survey will be obvious!!David