Being Lucky Isn’t A Plan

“In my experience, there’s no such thing as luck.” – Obi Won Kenobi, Star Wars Ep. 4 “A New Hope”

In April of 2019, a single bet on Tiger Woods winning the Masters resulted in a $1.2 million payout

The person who placed this bet was not a wealthy individual or someone who was a professional gambler but this person was someone who was “self-employed”.  He had two student loans, two car loans and a mortgage. He spoke of himself as having a background in finance and considered himself to be “a responsible guy” (believe it or not).

I don’t know what would cause someone who considers themselves as being responsible, with a mound of debt to do something as risky as placing an $85k bet on a single outcome.

Trusting in a Feeling?

To put it bluntly, He got lucky!  He thought Tiger Woods was “pre-destined’ to win. “Feeling that I had that led me to bet on Tiger in the first place.”  He stated. “A Feeling”

So because the outcome landed in his favor this time, it may lead him to overestimate his ability to see “pre-destined” outcomes in the future.  Logic and Reason may be put aside for a “feeling” in future financial decisions.

Luck is what happens when preparation meets opportunity.” – Seneca

Sometimes in life, we get lucky.  Sometimes in life, we’re unlucky. Outcomes are rarely evidence of our skill or even how wise our decision-making skills are.  This is also true with Investing.

Investors often confuse luck with skill.  Short-term outcomes are rarely driven by skill but are more likely to be a product of luck. In the short-term luck and chance rule.

Discipline and Patience are often the tell-tell signs of Investment skill. Frequent changes in prices and “luck” make being disciplined and patient, easy to say but hard to do.  In this age of instant gratification, we want instant feedback. Sticking to a strategy and plan just may be the characteristics of a skilled investor.

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Securities offered through LPL Financial, Member FINRA/SIPC The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal.