“Do you feel lucky?” I asked the chairman of the implausibly sized investment company Second Coming Asset Management as we enjoyed a few pints of Evolving Distribution Structure at The Cost-Cutter’s Euphemism. 

“Punk,” he replied. “Pardon?” I blinked. “I believe the quote is ‘Do you feel lucky, punk?” he clarified. “Technically, it’s not,” I quibbled. “But let’s not get sidetracked. I wanted to talk about the degree to which luck plays a part in finance and business.” “That shouldn’t take long,” said the chairman. “Anyone who has enjoyed any success in Her Majesty’s financial services industry and claims luck has played no part is lying or deluded – possibly both.”

“Interesting you say that,” I said, “because, in a survey of 502 entrepreneurs by specialist insurer Hiscox, only 15 per cent attributed their business success to luck, with most defining luck as being in the right place at the right time, making contact with the right people or having an idea that happens to be appropriate at the time.” “I wonder how you can succeed without at least one of those,” the chairman observed. “Three-fifths of respondents reckoned their own hard work and perseverance had played the biggest part in their success,” I replied, “in as much as their actions had made favourable situations and outcomes more likely.” “So potayto, potahto then?” said the chairman.

“Very possibly,” I nodded. “Hiscox hosted a debate on luck versus hard work featuring some interesting-sounding speakers. For example, author Douglas Miller explored the idea that proactive thinking can help create luck while, after years of research, Dr Stephann Makri believes there is a type of luck – serendipity – that we can influence. Meanwhile, Dr Matthew Smith, who has a PhD on the psychology and parapsychology of luck, highlighted how psychologists have traditionally assumed luck is an unstable force outside our control.” “Parapsychology?” asked the chairman. “Ghostbusting,” I confirmed. “Oh, he must come and talk to Scam!” the chairman exclaimed.

“The one entrepreneur on the panel made the fair point that a ‘lucky’ career is about seizing opportunities and thus success is down to both luck and hard work,” I continued. “But the survey also identified a third quality as integral to success: the ability to take risks.” “Ah, that is something with which I can identify,” said the chairman.

“I know,” I nodded. “I’ve seen your marketing literature. Still, I also dug up some research from a different angle – courtesy of Professor Jerker Denrell of our new favourite grove of academe, Warwick Business School, and the equally splendidly named Christina Fang of, fittingly, Stern School of Business. After analysing three years’ worth of quarterly interest rate and inflation forecasts in the Wall Street Journal, they concluded that those who had pulled off a big windfall by going against the tide were, over the long term, the worst at forecasting. Meanwhile, the experts who picked the predictable numbers came out on top.

“Apparently, those who do well going against the grain stick in our minds and we turn to them for guidance on future events. But the very traits that lead them to their out-of-the-ordinary predictions usually also lead to misses. Thus, according to Den-rell and Fang, those who boast decent but unexceptional performance with predictions have the most to offer.” “You mean the ones whose predictions never stray further than plus or minus one percentage point from the average over the long term?” asked the chairman. “Presumably so,” I said. “And Denrell and Fang conclude that successful bold predictions do not signal the competence of the predictor at all and, even if someone makes two successful bold predictions, it is apparently more likely a fluke. Aside from that, I don’t know what to say.” “Lucky me,” said the chairman.