Do I feel lucky?

Ok, I’m going call it…

This is, by some distance:

The Best Application of Statistics in Cinematic History‘:

It has everything: the importance of good quality data; inference; hypothesis testing; prediction; decision-making; model-checking. And Clint Eastwood firing rounds off a 44 Magnum while eating a sandwich.

But, on this subject, do you feel lucky? (Punk)

Richard Wiseman is Professor in Public Understanding of Psychology at the University of Hertfordshire. His work touches on many areas of human psychology, and one aspect he has studied in detail is the role of luck. A summary of his work in this area is contained in his book The Luck Factor.

This is from the book’s Amazon description:

Why do some people lead happy successful lives whilst other face repeated failure and sadness? Why do some find their perfect partner whilst others stagger from one broken relationship to the next? What enables some people to have successful careers whilst others find themselves trapped in jobs they detest? And can unlucky people do anything to improve their luck – and lives?

Richard’s work in this field is based over many years of research involving a study group of 400 people. In summary, what he finds, perhaps unsurprisingly, is that people aren’t born lucky or unlucky, even if their perception is that they are. Rather, our attitude to life generally determines how the lucky and unlucky events we experience determine the way our lives pan out. In other words, we really do make our own luck.

He goes on to identify four principles we can adopt in order to make the best out of the opportunities (and difficulties) life bestows upon us:

  1. Create and notice chance opportunities;
  2. Listen to your intuition;
  3. Create self-fulfilling prophesies via positive expectations;
  4. Adopt a resilient attitude that transforms bad luck into good.

In summary: if you have a positive outlook on life, you’re likely to make the best of the good luck that you have, while mitigating as well as is possible  against the bad luck.

But would those same four principles work well for a sports modelling company? They could probably adopt 1, 3 and 4 as they are, perhaps reinterpreted as:

1. Seek out positive value trading opportunities wherever possible.

3. Build on success. Keep a record of what works well, both in trading and in the company generally, and do more of it.

4. Don’t confuse poor results with bad luck. Trust your research.

Principle 2 is a bit more problematic: much better to stress the need to avoid the trap of following instinct, when models and data suggest a different course of action. However, I think the difficulty is more to do with the way this Principle has been written, rather than what’s intended. For example, I found this description in a review of the book:

Lucky people actively boost their intuitive abilities by, for example… learning to dowse.

Learning to dowse!

But this isn’t what Wiseman meant at all. Indeed, he writes:

Superstition doesn’t work because it is based on outdated and incorrect thinking. It comes from a time when people thought that luck was a strange force that could only be controlled by magical rituals and bizarre behaviors.

So, I don’t think he’s suggesting you start wandering around with bits of wood in a search for underground sources of water. Rather, I think he’s suggesting that you be aware of the luck in the events around you, and be prepared to act on them. But in the context of a sports modelling company, it would make sense to completely replace reference to intuition with data and research. So…

2. Invest in data and research and develop your trading strategy accordingly.

And putting everything together:

  1. Seek out positive value trading opportunities wherever possible.
  2. Invest in data and research and develop your trading strategy accordingly.
  3. Build on success. Keep a record of what works well, both in trading and in the company generally, and do more of it.
  4. Don’t confuse poor results with bad luck. Trust your research.

And finally, what’s that you say?  “Go ahead, make my day.” Ok then…