fooled by randomness
- People who obsessively read the Wall Street Journal every day expend a lot of effort for very little reward.
- If she checks her portfolio every minute, as many traders do these days, she will largely only see the small variance inherent to her portfolio, i.e. the natural ups and downs that are not related to the stock’s performance. Being emotional like all humans, she nevertheless rejoices at profits and agonizes over losses. Thus each year she can expect to experience 60 688 minutes of pleasure versus 60 271 of pain. If, on the other hand, she checks her portfolio annually, the actual performance of her stock drowns out the noise-component. She can expect to feel pleasure 19 out of 20 years.
Outliers
- Just as height in basketball players only matters to a point, after you have a sufficient amount of legal expertise, other factors start to play a bigger role. Related skills and traits are necessary foundations for achievement in a field – you can’t become a leading legal expert if you have zero logical reasoning skills – however, once you’ve reached the skills threshold, marginal increases in innate reasoning abilities won’t advance you.
- World-class mastery of anything demands around 10,000 hours of practice – no easy feat.
- The month you’re born in can have a huge effect on what you achieve.
- The year you’re born in can make or break you.