I loved this piece from Morgan Housel ‘Surviving the Continuous Chain of Disappointments‘.
It’s ironic that the secret to winning was learning how to put up with losing, but there it was. “Having an edge and surviving are two different things,” Nassim Taleb once wrote.
This is a great analogy for most business and investing endeavors.
Capitalism doesn’t like edges. It unleashes competition to bang them back toward zero. When edges do arise they’re usually small. A system that gives you a 55%, or 65% chance of success is phenomenal, but it still means you’ll spend close to half your life getting beat up. Since 100% odds of success are either not lucrative, illegal, or ephemeral, the ability to survive losing is a prerequisite to any shot at eventually winning. The business world is a continuous chain of disappointments – recessions, bear markets, brutal competition, employees quitting, supply chain breakdowns, whatever – so every chance at success has to be framed as a net reward down the road amid a constant state of battle and hassle. Thorp understood this. Most of his disciples did not. Most people don’t in general.
Also published on Medium.