I wanted to share these two short articles (both centred around luck & regret) because they build on something that I wanted to dive further into in my recent post, ‘valuing the unknowable’. There, I talked about how there are unknown unknowns, there are people who obsess over noise at the expense of signal, and that the best use of time would be to acquire businesses that create environments conducive to benefiting from these strokes of luck that are so critical to long-term returns; whether we admit it or not. Even Buffett himself said as much in his Berkshire letter last week.

Housel’s piece observes the differences in how people process bad experiences and good experiences. When most people experience bad times they tend to think of it as having been a risk. He suggests the logic is seldom reversed; where people attribute good times to luck; the opposite of risk. I suspect they, instead, allow it to inflate their ego; “I did that, that was all me”. But neither luck nor risk is permanent.

This quote reminded me of creative destruction in some ways. It also left me with a deeper sense of appreciation for those humble enough to admit when they were simply the benefactor of luck. And then we have the Ensemble Capital memo, which takes a look at how luck, good and bad, always play a role in investment outcomes (but this is applicable to life, too).

The piece focuses on regret and why we should use mistakes as learning opportunities. Following a mistake, you have two options; regret or learn. To regret is like slicing yourself with both sides of a double-edged sword, afflicting twice the pain. To learn from a mistale is a method of healing and will make you wiser.