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Luck and risk are financial siblings
💡 Success and failure both owe more to luck and risk than we like to admit, so judge outcomes with humility.
Housel insists that luck and risk are two sides of the same coin: both are the reality that life's outcomes are guided by forces beyond individual effort. We love crediting skill for success and blaming stupidity for failure — but chance plays an enormous, invisible role in both.
His example: Bill Gates attended one of the only high schools in the world with a computer in 1968 — a one-in-a-million stroke of luck. His equally talented friend Kent Evans died in a mountaineering accident before he could share in Microsoft's rise. Same skill, wildly different luck.
The practical takeaway is to be careful who you praise and admire, and careful who you look down upon. Because luck is hard to measure and rude to invoke, we systematically underrate it. When studying successes and failures, focus on broad patterns rather than specific individuals — and leave room for the role of chance in your own results.
Source: The Psychology of Money: Timeless lessons on wealth, greed, and happiness — Morgan Housel