----- Forwarded message from "Stephen D. Williams" <[email protected]> -----
From: "Stephen D. Williams" <[email protected]> Date: Thu, 07 Jun 2012 12:13:54 -0700 To: [email protected] Subject: Re: [FoRK] [tt] [silk] Michael Lewis on luck User-Agent: Mozilla/5.0 (Macintosh; Intel Mac OS X 10.7; rv:12.0) Gecko/20120428 Thunderbird/12.0.1 Reply-To: Friends of Rohit Khare <[email protected]> Great setup, weak conclusion. I think these are key points to keep in mind: Prepare to take advantage of any opportunity you may find, but don't assume that it will happen: *"Did you ever observe to whom the accidents happen? Chance favors only the prepared mind." - Louis Pasteur * *Other quotes from Pasteur:* "Any new system is worth trying when your luck is bad." "Fortune has rarely condescended to be the companion of genius." "When you work seven days a week, fourteen hours a day, you get lucky." Be careful of what knowledge and skills you invest so that they are most needed and valid. But also follow your passion, even if it might not seem in demand or a sure thing: All types of knowledge have been turned into useful and profitable pursuits with various levels of creativity and hard work. Always be growing, learning, and reinventing yourself. Fire yourself from a job before anyone else has a chance to, especially for becoming too comfortable and failing to grow fast enough. Many people put in a lot of work, and even have some creative and inventive ideas that do not get recognized, and fail to be successful by various measures. All you can do is work to increase your chances by preparing, trying to make better decisions, and learn from mistakes and inefficiencies. Success and failure are only partial, probabilistic indications of how well you are doing things. Successful people have a responsibility to make the best investment of their resources for themselves, family, and society. If they have skills that actually are competitive, they should strive to keep using them. If not, they should use their resources to enable those who's skills are. sdw On 6/7/12 9:57 AM, Udhay Shankar N wrote: > This is one of my hotbuttons. I know several people who have made > significant amounts of money, and have convinced themselves it was > because they are smart. (They *are* smart, it's just that correlation > doesn't equal causation) > > Worth a read. > > Udhay > > https://www.princeton.edu/main/news/archive/S33/87/54K53/ > > "Don't Eat Fortune's Cookie" > Michael Lewis > June 3, 2012 — As Prepared > > (NOTE: The video of Lewis' speech as delivered is available on the > Princeton YouTube channel.) > > Thank you. President Tilghman. Trustees and Friends. Parents of the > Class of 2012. Above all, Members of the Princeton Class of 2012. Give > yourself a round of applause. The next time you look around a church and > see everyone dressed in black it'll be awkward to cheer. Enjoy the moment. > > Thirty years ago I sat where you sat. I must have listened to some older > person share his life experience. But I don't remember a word of it. I > can't even tell you who spoke. What I do remember, vividly, is > graduation. I'm told you're meant to be excited, perhaps even relieved, > and maybe all of you are. I wasn't. I was totally outraged. Here I’d > gone and given them four of the best years of my life and this is how > they thanked me for it. By kicking me out. > > At that moment I was sure of only one thing: I was of no possible > economic value to the outside world. I'd majored in art history, for a > start. Even then this was regarded as an act of insanity. I was almost > certainly less prepared for the marketplace than most of you. Yet > somehow I have wound up rich and famous. Well, sort of. I'm going to > explain, briefly, how that happened. I want you to understand just how > mysterious careers can be, before you go out and have one yourself. > > I graduated from Princeton without ever having published a word of > anything, anywhere. I didn't write for the Prince, or for anyone else. > But at Princeton, studying art history, I felt the first twinge of > literary ambition. It happened while working on my senior thesis. My > adviser was a truly gifted professor, an archaeologist named William > Childs. The thesis tried to explain how the Italian sculptor Donatello > used Greek and Roman sculpture — which is actually totally beside the > point, but I've always wanted to tell someone. God knows what Professor > Childs actually thought of it, but he helped me to become engrossed. > More than engrossed: obsessed. When I handed it in I knew what I wanted > to do for the rest of my life: to write senior theses. Or, to put it > differently: to write books. > > Then I went to my thesis defense. It was just a few yards from here, in > McCormick Hall. I listened and waited for Professor Childs to say how > well written my thesis was. He didn't. And so after about 45 minutes I > finally said, "So. What did you think of the writing?" > > "Put it this way" he said. "Never try to make a living at it." > > And I didn't — not really. I did what everyone does who has no idea what > to do with themselves: I went to graduate school. I wrote at nights, > without much effect, mainly because I hadn't the first clue what I > should write about. One night I was invited to a dinner, where I sat > next to the wife of a big shot at a giant Wall Street investment bank, > called Salomon Brothers. She more or less forced her husband to give me > a job. I knew next to nothing about Salomon Brothers. But Salomon > Brothers happened to be where Wall Street was being reinvented—into the > place we have all come to know and love. When I got there I was > assigned, almost arbitrarily, to the very best job in which to observe > the growing madness: they turned me into the house expert on > derivatives. A year and a half later Salomon Brothers was handing me a > check for hundreds of thousands of dollars to give advice about > derivatives to professional investors. > > Now I had something to write about: Salomon Brothers. Wall Street had > become so unhinged that it was paying recent Princeton graduates who > knew nothing about money small fortunes to pretend to be experts about > money. I'd stumbled into my next senior thesis. > > I called up my father. I told him I was going to quit this job that now > promised me millions of dollars to write a book for an advance of 40 > grand. There was a long pause on the other end of the line. "You might > just want to think about that," he said. > > "Why?" > > "Stay at Salomon Brothers 10 years, make your fortune, and then write > your books," he said. > > I didn't need to think about it. I knew what intellectual passion felt > like — because I'd felt it here, at Princeton — and I wanted to feel it > again. I was 26 years old. Had I waited until I was 36, I would never > have done it. I would have forgotten the feeling. > > The book I wrote was called "Liar’s Poker." It sold a million copies. I > was 28 years old. I had a career, a little fame, a small fortune and a > new life narrative. All of a sudden people were telling me I was born to > be a writer. This was absurd. Even I could see there was another, truer > narrative, with luck as its theme. What were the odds of being seated at > that dinner next to that Salomon Brothers lady? Of landing inside the > best Wall Street firm from which to write the story of an age? Of > landing in the seat with the best view of the business? Of having > parents who didn't disinherit me but instead sighed and said "do it if > you must?" Of having had that sense of must kindled inside me by a > professor of art history at Princeton? Of having been let into Princeton > in the first place? > > This isn't just false humility. It's false humility with a point. My > case illustrates how success is always rationalized. People really don’t > like to hear success explained away as luck — especially successful > people. As they age, and succeed, people feel their success was somehow > inevitable. They don't want to acknowledge the role played by accident > in their lives. There is a reason for this: the world does not want to > acknowledge it either. > > I wrote a book about this, called "Moneyball." It was ostensibly about > baseball but was in fact about something else. There are poor teams and > rich teams in professional baseball, and they spend radically different > sums of money on their players. When I wrote my book the richest team in > professional baseball, the New York Yankees, was then spending about > $120 million on its 25 players. The poorest team, the Oakland A's, was > spending about $30 million. And yet the Oakland team was winning as many > games as the Yankees — and more than all the other richer teams. > > This isn't supposed to happen. In theory, the rich teams should buy the > best players and win all the time. But the Oakland team had figured > something out: the rich teams didn't really understand who the best > baseball players were. The players were misvalued. And the biggest > single reason they were misvalued was that the experts did not pay > sufficient attention to the role of luck in baseball success. Players > got given credit for things they did that depended on the performance of > others: pitchers got paid for winning games, hitters got paid for > knocking in runners on base. Players got blamed and credited for events > beyond their control. Where balls that got hit happened to land on the > field, for example. > > Forget baseball, forget sports. Here you had these corporate employees, > paid millions of dollars a year. They were doing exactly the same job > that people in their business had been doing forever. In front of > millions of people, who evaluate their every move. They had statistics > attached to everything they did. And yet they were misvalued — because > the wider world was blind to their luck. > > This had been going on for a century. Right under all of our noses. And > no one noticed — until it paid a poor team so well to notice that they > could not afford not to notice. And you have to ask: if a professional > athlete paid millions of dollars can be misvalued who can't be? If the > supposedly pure meritocracy of professional sports can't distinguish > between lucky and good, who can? > > The "Moneyball" story has practical implications. If you use better > data, you can find better values; there are always market inefficiencies > to exploit, and so on. But it has a broader and less practical message: > don't be deceived by life's outcomes. Life's outcomes, while not > entirely random, have a huge amount of luck baked into them. Above all, > recognize that if you have had success, you have also had luck — and > with luck comes obligation. You owe a debt, and not just to your Gods. > You owe a debt to the unlucky. > > I make this point because — along with this speech — it is something > that will be easy for you to forget. > > I now live in Berkeley, California. A few years ago, just a few blocks > from my home, a pair of researchers in the Cal psychology department > staged an experiment. They began by grabbing students, as lab rats. Then > they broke the students into teams, segregated by sex. Three men, or > three women, per team. Then they put these teams of three into a room, > and arbitrarily assigned one of the three to act as leader. Then they > gave them some complicated moral problem to solve: say what should be > done about academic cheating, or how to regulate drinking on campus. > > Exactly 30 minutes into the problem-solving the researchers interrupted > each group. They entered the room bearing a plate of cookies. Four > cookies. The team consisted of three people, but there were these four > cookies. Every team member obviously got one cookie, but that left a > fourth cookie, just sitting there. It should have been awkward. But it > wasn't. With incredible consistency the person arbitrarily appointed > leader of the group grabbed the fourth cookie, and ate it. Not only ate > it, but ate it with gusto: lips smacking, mouth open, drool at the > corners of their mouths. In the end all that was left of the extra > cookie were crumbs on the leader's shirt. > > This leader had performed no special task. He had no special virtue. > He'd been chosen at random, 30 minutes earlier. His status was nothing > but luck. But it still left him with the sense that the cookie should be > his. > > This experiment helps to explain Wall Street bonuses and CEO pay, and > I'm sure lots of other human behavior. But it also is relevant to new > graduates of Princeton University. In a general sort of way you have > been appointed the leader of the group. Your appointment may not be > entirely arbitrary. But you must sense its arbitrary aspect: you are the > lucky few. Lucky in your parents, lucky in your country, lucky that a > place like Princeton exists that can take in lucky people, introduce > them to other lucky people, and increase their chances of becoming even > luckier. Lucky that you live in the richest society the world has ever > seen, in a time when no one actually expects you to sacrifice your > interests to anything. > > All of you have been faced with the extra cookie. All of you will be > faced with many more of them. In time you will find it easy to assume > that you deserve the extra cookie. For all I know, you may. But you'll > be happier, and the world will be better off, if you at least pretend > that you don't. > > Never forget: In the nation's service. In the service of all nations. > > Thank you. > > And good luck. > _______________________________________________ FoRK mailing list http://xent.com/mailman/listinfo/fork ----- End forwarded message ----- -- Eugen* Leitl <a href="http://leitl.org";>leitl</a> http://leitl.org ______________________________________________________________ ICBM: 48.07100, 11.36820 http://www.ativel.com http://postbiota.org 8B29F6BE: 099D 78BA 2FD3 B014 B08A 7779 75B0 2443 8B29 F6BE
