You don’t really notice randomness when things are going your way.
That’s usually where the problem starts.
Most of us like to believe outcomes mean something concrete. If you made money, you must have done something right. If you lost, you must have made a mistake. It feels logical. Clean. But reality doesn’t work that neatly.
That’s usually where the problem starts.
Most of us like to believe outcomes mean something concrete. If you made money, you must have done something right. If you lost, you must have made a mistake. It feels logical. Clean. But reality doesn’t work that neatly.
Markets don’t reward effort. They don’t consistently reward intelligence either. They reward positioning relative to uncertainty. It matters far more what you’re prepared for. Not necessarily what happens. In a matter of speaking, God laughs ant your plans. Further, when things “work out”, uncertainty has a habit of producing results that look intentional when they were in fact an educated guess.
Think about two traders. One takes on a lot of risk and happens to catch the right move. The other is measured, disciplined, follows a solid process, but gets caught on the wrong side of timing. The first one looks sharp. The second looks like he doesn’t know what he’s doing. But that’s just a snapshot. It doesn’t tell you much about what actually happened.
The real issue is what comes after.
The one who wins starts to believe it was skill. He sizes up. Get’s some hubris, and starts making some big bets. He leans in harder and larger. That fool becomes more confident in decisions that were never fully under his control to begin with. However, the other starts second guessing himself, maybe even abandoning a good process because it didn’t “work.”
Think about two traders. One takes on a lot of risk and happens to catch the right move. The other is measured, disciplined, follows a solid process, but gets caught on the wrong side of timing. The first one looks sharp. The second looks like he doesn’t know what he’s doing. But that’s just a snapshot. It doesn’t tell you much about what actually happened.
The real issue is what comes after.
The one who wins starts to believe it was skill. He sizes up. Get’s some hubris, and starts making some big bets. He leans in harder and larger. That fool becomes more confident in decisions that were never fully under his control to begin with. However, the other starts second guessing himself, maybe even abandoning a good process because it didn’t “work.”
That’s how randomness quietly reshapes behavior. It’s not just about the result. It changes how you think about future decisions. Where did you get it “wrong”. Where did you get it “right”. This is foolish.
We’re wired to tell stories. Our minds can’t help but work outside of narratives. One strong outcome feels more convincing than a hundred quiet probabilities. Why? Because we’re simply dying to be smart. We have an innate need to be right. You see someone succeed and it feels like proof. You don’t see the many who tried the same thing and failed. Survivor bias which we are all too aware of but none will admit. So the picture you’re working with is incomplete from the start.
This shows up everywhere. Trading, business, investing, personal life, you name it. People copy what looks successful without asking whether it was actually repeatable.
There’s a different way to approach it, but it’s less satisfying in the short term.
Instead of asking whether something worked, you ask whether the decision made sense given what was known at the time. That’s a harder standard. You don’t always get immediate feedback. Sometimes you do everything right and still lose. Sometimes you get rewarded for something you shouldn’t have done.
If you can’t separate those two things, you end up chasing noise.
So you build around that. Start with the assumption that you’re going to be wrong more than you’d like. Position things so one bad outcome doesn’t take you out. Avoid needing to be perfectly right at the perfect moment. Don’t expect the starts to align! Don’t wait for that either! Stay a little skeptical of both your wins and your losses.
This shows up everywhere. Trading, business, investing, personal life, you name it. People copy what looks successful without asking whether it was actually repeatable.
There’s a different way to approach it, but it’s less satisfying in the short term.
Instead of asking whether something worked, you ask whether the decision made sense given what was known at the time. That’s a harder standard. You don’t always get immediate feedback. Sometimes you do everything right and still lose. Sometimes you get rewarded for something you shouldn’t have done.
If you can’t separate those two things, you end up chasing noise.
So you build around that. Start with the assumption that you’re going to be wrong more than you’d like. Position things so one bad outcome doesn’t take you out. Avoid needing to be perfectly right at the perfect moment. Don’t expect the starts to align! Don’t wait for that either! Stay a little skeptical of both your wins and your losses.
What was the word? Humility?
The goal isn’t to outsmart randomness. You won’t. The goal is to not get carried away by it. You need to survive. It’s far more valuable to stay in the game long enough for things to balance out or even grow! To recognize that not everything that works once is something you should trust twice.
Most people don’t fail because they were wrong. They fail because they believed too strongly that they were right.
The goal isn’t to outsmart randomness. You won’t. The goal is to not get carried away by it. You need to survive. It’s far more valuable to stay in the game long enough for things to balance out or even grow! To recognize that not everything that works once is something you should trust twice.
Most people don’t fail because they were wrong. They fail because they believed too strongly that they were right.
