Feeling Lucky

How much of our success is due to luck?

As HumbleDollar’s U.S. readers have occasionally noted, we’ve all been lucky in one crucial way: We live in 2024 in what’s arguably the most economically successful nation ever. That’s meant large swaths of the population have enjoyed financial success, even if they weren’t the best students, or the hardest workers, or the most talented employees.

But our luck doesn’t end there. Before we persuade ourselves that our success was solely due to our own talents and efforts, there’s a host of other factors we should acknowledge.

Nature. Do you enjoy good health? Are you good looking? Do you have innate talents that are highly valued by today’s economy? To be sure, if you don’t nurture those talents or take care of your health, all may be for naught. Still, some folks are born with greater advantages than others, and—if you’re among them—it’s important to recognize that your success isn’t solely due to your hard work.

Nurture. Similarly, some of us have an edge thanks to the family we were born into. Did our parents emphasize the value of education? Did they teach us good habits? Did they pay for college and provide other financial support? Again, we should acknowledge that, unlike many others, we started life with a leg up.

Mentors. I got my first job in journalism a few days after my 19th birthday. I had 10 months between finishing boarding school in England and starting university, and what I learned during those months was probably more valuable than what I learned at Cambridge.

A big reason was Leslie Leven, the editor of a small newspaper in Potomac, Maryland, where I worked during those months. Leslie herself had just earned a degree in journalism from American University, and she seized the chance to teach me what she’d learned. Even today, when I’m writing and editing, I hear her voice in my head.

Employer success. My career was defined by four full-time positions. The longest two were 18 years at The Wall Street Journal and six years at Citigroup. Both businesses struggled during the time I worked there, with frequent rounds of layoffs. I often wondered what it would have been like to work for a profitable, fast-growing company like Nvidia or Google, where presumably there isn’t a constant focus on cutting costs.

Indeed, I remember visiting Google’s New York City headquarters, and seeing the well-stocked kitchens for employees and the comfy places where folks could work. No company I ever worked for would have lavished money on such things.

Stock picks. For those with a fondness for picking individual stocks—that wouldn’t include me—it’s important to grasp a crucial concept: skewness. The most a stock can lose is 100% of its value, but the potential gain is infinite. Each year, the market averages are skewed higher by a minority of stocks with fabulous gains.

Most stock pickers don’t own these stocks, or don’t own enough to notch market-beating gains, but those who do can enjoy returns that are the envy of their neighbors. Are the winners smart or lucky? Given that the vast majority of professional money managers fail to consistently beat the market, despite their ample intelligence, “smarts” sure doesn’t strike me as a convincing explanation.

Lifetime sequence of returns. Were stocks in the dumps when you were saving for retirement, allowing you to buy shares at rock-bottom prices, and did they soar as you approached retirement and started moving money into bonds and cash? Consider yourself lucky—far luckier than those who faced the opposite scenario.

Make no mistake: Luck plays a huge role in our financial success. Cast an eye back over your life. What lucky things happened to you?