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Blaming things on luck, good or bad, is often just a way of rationalizing one's actions, and providing an excuse for not learning from one's mistakes.

Of course there is an element of luck in everything we do. Nevertheless, except in rare cases, it is not likely to be the deciding factor. Nothing you can do about being hit by a meteor, but it does not happen very often.

When somebody loses money big time in the stock market, for example, it is appropriate to ask how it might have been avoided, rather than just blame bad luck.

Just to give a few examples, simple reading charts and technical indicators would have gotten you our of Worldcom, Imclone, and Enron before the final disasters. You may have taken a loss, depending on when you bought, but there was absolutely no reason for anybody who was paying attention to have ridden those stocks down to their current levels. The charts did not predict bankruptcy on Worldcom and Enron, of course, but they did predict a decline in price, and a prudent investor gets out to avoid that. Of course, there may not have been any reason to buy those stocks either - I don't know about that. I never owned those stocks.

The same may be said about this current market decline. It was fairly obvious around the beginning of April that the rally was running out of steam. No telling how long the decline would be, but no point in riding it out either. If you stayed in and lost money, then you should be asking yourself how you could have prevented that, and not talking about luck.

William O'Neil, the inventor of the CANSLIM method of trading stocks, was interviewed on Bloomberg not too long ago. When the interviewer asked him what somebody who had lost big time in this market should do, O'Neil said that they should realize that they had made mistakes, analyze what they did wrong, and take corrective action. He did not say that they should realize that it was all luck.

I cannot speak to the real estate market, about which I know very little except that high leverage in that area is risky. Unlike the stock market, where you can quickly sell in anticipation of a margin call, real estate is much less liquid.

The ancient world worshiped the goddess Fortune. Many people believed that the future was not in their control, and that the only course was to pray that Fortune would smile on them. Such a belief is comforting in a strange way. If you are not responsible for what happens to you, then you might as well quit trying to make something of yourself and just go with the flow.

One of my professors said belief in luck was the same thing as belief in fortune. I won't argue about that one. It does provide the same sort of comfort. If luck is the decisive factor, then improving your technique, learning from the past, etc., is relatively unimportant.

The point is that if things are confusing, and you see nothing in particular that you can do to improve your situation, then you have at least two choices: (1) Say it is primarily a matter of luck, relax and hope for the best, or (2) Make a real effort to figure things out, improve your technique and knowledge, and change what is wrong.
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