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When you accept that tails drive everything in business, investing and finance you realize that it is normal for lots of things to go wrong, break, fail and fall.
If you are a good stock picker you will be right maybe half the time. If you are a good business leader may be half of your product and strategy idea will work.
If you are a good investor t most year’s l will be just OK, and plenty will be bad.
If you are a good worker you will find the right company in the right field after several attempts land trails.
And that is if you are good.
Peter Lynch is one of the best investors. If you are terrific in this business, you are right six times out of 10.
There are fields where you must be prefect every time. Flying a plane, for example. Then there are fields where you want to be at least pretty good nearly all the time.
Something I have learned from both investors and entrepreneurs is that no one makes good decisions all the time. The most impressive people are packed full of horrendous ideas that are often acted upon.
Take Amazon. It is not intuitive to thin a failed product launch at a major company would be normal and fine. Intuitively, you had think the CEO should apologize to shareholder. But Jeff Bezos said shortly after the disastrous launch of the company’s Fire Phone.
It is OK for Amazon to lose a lot of money or Fire Phone because it will be offset by something like Amazon Web Services that earns tens of millions of dollars. Tails to the rescue.
These are to delusions or failures of responsibility. They are a smart acknowledgement of how tails drive success. For every Amazon Prime or Orange is the new black you know with certainty that y9u will have some duds.
Part of why this is not intuitive is because in most fields we only see the finished product, not the losses incurred that led to the tail success product.
A similar thing happened in investing. It is easy to fine Warren Buffett’s net worth or his average annual returns. Or even his best, most notable investments. They are right here in the open land they are that people talk about.
It is much harder to piece together every investment he is mad over his career. No one talks about the dud pick, the ugly businesses, and the poor acquisitions. But there are a big part of Buffett’s story. They are the other side of till driven return.
At the Berkshire Hathaway’s shareholder meeting in 3014 Warren Buffett said he owned 400 to 500 stocks during his life and made most of his money on 10 of them, Charlie Hunger followed up, if you remove just a few of Berkshire’s top investments, its long term track record is pretty average.
When we pay special attention to a role model’s successes we overlook that their gains came from a small percent of their actions. That makes our own failures, losses and setbacks feel like, we are doing something wrong. But it is possible we are wrong or just sort of right, just as often as the masters are. They may have been more right, just as often as the masters are. They may have been more right when they were right, but they could have been wrong just as often as you.
It is not whether you are tight or wrong that is important, but how much money you make when you are right and how much you lose when you are wrong, You can be wrong half the time and still make a fortune.
