STE's Stocks Investing Journey

image credit to mymoneyblog.com When buying TOTO, everyone thinks ( or at least hopes ) that they will be the “lucky” one to become the next “millionaire” and we all knew that winning 4D or TOTO is just pure luck, but how about investing? My friend ( Chirs ) from (Growing Your Tree of Prosperity ) have blogged about it here which caught my attention to write about my case and “luck factors “ which have much impact on my of investing.   ( What is your Return on Luck (ROL) ? ) <link>

Winning the lottery can be a huge, life-changing event. Imagine you'd just won few millions $$ from TOTO and not to forget the  probability   of an ordinary S$1 bet winning the jackpot  is 1 in 13,983,816   chance .   You must be “damn lucky “ in winning the TOTO but what happens to your life after receiving such big “windfall “. Will your life change better or worse, according to a study, “Lottery winners, despite overwhelming odds, are a rare few to win millions on the turn of a dime. Many are simple people just struggling to get by.  Having their financial concerns suddenly vanish must feel good. However, there’s a darker side to winning the lottery. Many winners end up worse off than they were before, broke, deeper in debt, divorced, or worst of all, dead. Like the old saying goes, more money, more problems. ” I am not so sure about Singapore’s case as no study been made on past lottery winner, but from below articles, it see...

One of my favourite book other than “ Game and Chaos Theory “ is this called “ Complex Adaptive Systems : An Introduction to Computational Models of Social Life, by John H. Miller and Scott E. Page “. What is “ Complex Adaptive System “  and why is it so important to understand the stocks market? other than “ behavioural or psychological “ aspect of the market. We often look at the things or world as “ linear “ and has a very clear “cause and effect “ relationship . The bulk of economics studies is based on equilibrium systems: for example, a balance between supply and demand, risk and reward, price and quantity, this view stems from the idea that economics is a science similar to Newtonian physics , with an identifiable link between cause and effect and implied predictability. When the equilibrium system is hit by an exogenous shock, it absorbs the shock and returns to an equilibrium state.

image credit to mymoneyblog.com We all know well that the market is efficient (most of the time) and much active management fund outperform because of “luck “ and not skill.  You may find out more about this topic in my previous blog on    Success in Investing: Skill or Luck?  ( here ).   As most of the investment professional think, it is hard to admit that luck plays as significant a role as skill in their investment success. That's not to say skill is unimportant but betting on continued success doesn't work well in investing as in other fields.

<Edited with additional info and video clip > Investment Success: Skill or Luck? We always attribute our success in life or any aspect in life ( e.g career development /doing business / investing ) to our skill or performance but does  “luck”  has any place in these successful events. If we think that  skill  ( talent ) play a very important role in investing,, then you may find that some very talented or intelligent people fail in investing ( e.g Newton ), and if you think that investing is purely on luck, then we may have a puzzle to explain the success of great investors like Warren Buffett or Peter Lynn and others in beating the markets for multiple years.