Currently Reading: The Success Equation By Michael J. Mauboussin

Mr. Mauboussin has written numerous books about investing, business and sports and intertwines these with stories using psychology and other mental models to help the reader become a more critical thinker.

In his most recent book, The Success Equation, he discusses how skill and luck can be used to determine our success or lack of success and how we can determine this ahead of time.

I am through page 60, and thus far the book is focusing on how we have a difficult time in seeing the difference between skill and luck because of the hardwiring in our brain.

I enjoyed this quote from page 41:

“One of the main reasons we are poor at untangling skill and luck is that we have a natural tendency to assume that success and failure are caused by skill on the one hand and a lack of skill on the other. But in activities where luck plays a role, such thinking is deeply misguided and leads to faulty conclusions.”

Also back on page 19 here are two quotes to consider:

“So here’s the distinction between activities in which luck plays a small role and activities in which luck plays a large role: when luck has little influence, a good process will always have a good outcome. When a measure of luck is involved, a good process will have a good outcome but only over time.”

If you get anything from this post get this:

“There’s a quick and easy way to test whether an activity involves skill: ask whether you can lose on purpose. In games of skill, it’s clear that you can lose intentionally, but when playing roulette or the lottery you can’t lose on purpose.”

More tomorrow from this very thought-provoking book!!!

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