TFS: Beware the lucky dog

In making decisions, we avoid variance. We want to bet on a sure thing. And yet, our desire to win often overcomes us. We pick a stock or a job candidate or a restaurant because it was recently successful. We pay less attention than we should to its track record. We think we have this crucial insight into its success, and we want to jump on the band wagon. But we are deluding ourselves, creating a causal story for the success in our mind but not testing that hypothesis.
Tq130607ldWe ignore the enormous importance of luck in that recent success, and when we ignore the luck, "regression to the mean" almost guarantees disappointment.

The only solution I can suggest is to distrust sudden success. One of my favorite movies is Pulp Fiction, where the charachters who survive have a healthy respect for their own luck. When something goes their way, they do NOT assume they deserved it or created it. Samuel Jackson's character gives credit to God. Bruce Willis's character just assumes his luck will change FAST. But neither one of them gets cocky about their success the way the John Travolta character does. That doesn't work out for him.

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