Lucky or Good?

Was it skill or was it luck?

Official Finish Cam. Source: BBC

It was one of the most exciting finishes ever. Two top rowers battled for first place down the 2000 meter course. Damir Martin of Croatia led most of the way. Towards the end, Mahe Drysdale of New Zealand—a former gold medalist—closed the gap. In the final seconds, Martin seemed to hold Drysdale off as they crossed the finish. But it was too close to call. The officials had to examine the finish camera to tell which boat was in front in the final instant.

It came down to the narrowest of margins. Only a fraction of an inch separated the two—less than a hundredth of a second. Martin was the first to applaud as Drysdale was announced the winner. How did Drysdale come out on top?

At the finish, Drysdale happened to be at the end of his stroke—the fastest point for the boat—just when they crossed the line. Martin was in mid-stroke, still applying power. At that point, Dysdale’s boat has a brief moment of maximum acceleration. That was enough to give him the miniscule edge over his rival. Over the 230-or-so strokes that both took to get down the course, the winner’s timing was aligned to be absolutely perfect.

Source: Bleacher Report, NBCOlympics.com

Drysdale was lucky. There’s no way he could have timed his strokes to give him that final edge. But both rowers were incredibly skilled. It was a delight to watch the fluidity and grace that they demonstrated—a perfect blend of technical skill, superb conditioning, and intense concentration. Drysdale wouldn’t have been in a position to be lucky if he hadn’t been good in the first place.

A similar thing is true when we invest. We may own a company that gets taken over, or one that has a blowout quarterly earnings report, and feel lucky that we’ve received a windfall. But you have to put yourself into a position to be lucky—whether it’s through exhaustive research or broad diversification or disciplined investment processes. As Samuel Goldwyn, the famous movie producer, once said: “The harder I work, the luckier I get.”

Douglas R. Tengdin, CFA

Chief Investment Officer

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