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Of Lucky Idiots and Orangutans

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Summary

The article discusses the concept of lucky idiots, or people who take risks and are bailed out by events, as well as the concept of orangutans and their ability to mimic success without understanding the underlying principles. Warren Buffett is cited in an article which explains how, in a contest in which everyone starts with one dollar, 220,000 people can get it right ten times in a row and win a dollar each, and 215 people can get it right 20 times in a row and win a million. The article then warns against following the advice of those who talk of easily turning small amounts of money into millions investing in stocks, as it is likely that they are lucky idiots and not skilled investors.

Q&As

What is the title of the book Morgan Housel calls “a masterpiece”?
The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life.

What phrase does Howard Marks of Oaktree Capital use to describe those who take the most risk in a booming market?
Congenitally aggressive types.

Who is Nassim Nicholas Taleb?
Nassim Nicholas Taleb is an author and philosopher who coined the phrase “lucky idiots”.

What analogy does Warren Buffett use to explain the idea of ‘lucky idiots’?
Warren Buffett uses the analogy of a coin-flipping contest to explain the idea of ‘lucky idiots’.

What advice does Sir John Templeton offer about investing?
Sir John Templeton's advice about investing is "The four most dangerous words in investing are: this time it’s different."

AI Comments

👍 This is an incredibly insightful article that clearly explains an important concept of investing. The references to wisdom from respected figures adds a lot of credibility to the message.

👎 The article is too long-winded and could have been condensed into a shorter piece. Also, the analogy of "lucky idiots" and orangutans is a bit too simplistic.

AI Discussion

Me: It's about the dangers of investing with a "get-rich-quick" mentality. The author talks about how even though some people might make a huge success with a lucky guess, it doesn't necessarily mean they are skilled investors. He uses the example of a contest with 225 million people flipping a coin and how those who get it right 10 times in a row are the "lucky idiots" and those who get it right 20 times are the "egotistical orangutans".

Friend: Wow, that's a really interesting analogy. So what are the implications of this article?

Me: Well, the main message of the article is that we should be careful when investing, and we should have an understanding of the risks involved. It also warns us against being too confident in our investments and expecting to get-rich-quickly. Ultimately, it's important to realize that luck and skill can both play a role in investing, and we should strive to have a balanced approach.

Action items

Follow the authors mentioned in the article on social media to stay up to date on their insights.
Read the book mentioned in the article to gain a deeper understanding of the ideas discussed.
Share the article with friends and family to spread the message of caution when it comes to investing.

Technical terms

Beta: Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.
Nassim Nicholas Taleb: Nassim Nicholas Taleb is a Lebanese-American essayist, scholar, statistician, and former trader and risk analyst, whose work focuses on problems of randomness, probability, and uncertainty.
Graham-and-Doddsville: Graham-and-Doddsville is a term used to refer to a group of investors who followed the investment philosophy of Benjamin Graham and David Dodd, two of the most influential investors of the 20th century.
Cocktail Parties: A cocktail party is a social gathering at which people drink cocktails and converse.
Orangutans: Orangutans are a species of great ape native to Indonesia and Malaysia. They are the only exclusively Asian genus of extant great ape.