You’ve got a question, and you need an answer.
So you do what most people do when they have access to the internet: You Google it.
When you reach the Google homepage, you see two buttons beneath the search bar. One reads “Google Search.” The other is “I’m Feeling Lucky.”
The “I’m Feeling Lucky” option is a gamble. If you click it, you bypass the usual page of endless search results and instead go directly to the top-ranked page for the search phrase you entered.
It means you’re trusting that Google has pinpointed the exact information you need, and you don’t need to peruse other options.
For investors, sometimes putting money in the stock market can feel like a gamble. You may not feel confident that you’ve pinpointed a surefire stock. You might win big… or lose it all.
Nicholas Vardy addressed this earlier this week when he wrote about economist Robert Frank. Frank developed a model for luck in his book Success and Luck: Good Fortune and the Myth of Meritocracy.
Frank’s model assumes that 40% of success is based on ability, 40% on effort and 20% on luck. So even for a rock star mutual fund manager like Bill Miller, who beat the S&P 500 15 years in a row, success was due less to ability… and more to luck.
As Nicholas put it…
Even if you accept that 80% of your success is due to talent and hard work, the remaining 20% due to luck is enough to ensure that only 5% of the hardest-working and most able end up winning the game.
Both talent and hard work are necessary, but neither is sufficient alone to win in the game of life.
We wanted to know how our readers felt about this subject. So in this week’s poll, we asked: Do you think luck plays a role in your investing success?
Responses were split down the middle on Twitter. On Facebook, we heard from a lot of readers who feel luck does play a role, along with ability and hard work. Reader Richard S. wrote, “If you read voraciously, have a positive outlook, and actually pull the trigger when you’re at an 80% confidence level, luck seems to find you.”
Reader Arie F. seemed to agree: “The harder I work, the luckier I get.”
And reader Lisa W. wrote, “Proper planning, upbeat attitude and a little luck go a LONG way!”
Note: Comments may have been edited for spelling, grammar and/or clarity.