Serendipity: The Role of Luck in Your Life and Career - The Big Picture

Since it’s commencement time, I wanted to share a few thoughts on serendipity.

I have been working in finance since 1996 — three decades. My views on nearly everything have evolved over that time: Indexing, crowd behavior, trading, media, hedge funds, fixed income, private equity, technology, success, and money.

The biggest belief shift I have made over that time is on the subject of “Luck .”

I downplayed the role of serendipity in my youth, but I have since come to recognize it as far weightier and more meaningful than I realized. Why? Because we all want to live in an orderly world governed by cause and effect. We need to believe that our efforts, intelligence, and skills will lead to good outcomes.

“Hard work is its own reward” blah, blah, blah.

But the simple truth is that random events can and do lead to unanticipated outcomes that drive much of what occurs. We underestimate fortune, randomness, and chance at our own peril.

I have been hosting the Masters in Business podcast for 12 years now and have interviewed 650 notable guests, including many Nobel laureates, CEOs, billionaires, fund managers, venture capitalists, private equity investors, and assorted celebrities. The first time a billionaire told me how much luck was involved in their success, I dismissed it as a case of “false humility.” But after the 5th and then 10th mention of luck by wildly differing guests, I could no longer dismiss this out of hand.

My interviews with Howard Marks, Chairman of Oaktree Capital, and famed for his “Chairman’s Memos,” were instructive.1 The first time he mentioned his good fortune, I pushed back, asking, “What about intelligence, hard work, and perseverance?”

His answer:

“Everybody in my MBA class at the University of Chicago was very smart and very hard working. But hard work and intelligence are mere table stakes. Not everybody has fortune smile on them; not everybody gets lucky.”

That very honest and sincere answer was persuasive; it made me realize I might be underestimating the role of luck in my own career.

So I thought about it; the more I considered various examples from my own life, the more I came to realize the role serendipity has played:

• Calling the bottom in March 2009 was as much a result of the school calendar — my wife is a teacher — as anything else. We were away on vacation when the market crossed my (infamous) target of “Dow 6,800” in March 2009. When we returned home that Sunday, I had already had time to quietly digest this while away from the markets. The timing of my Sunday evening “Cover Your Shorts and Go Long” missive was pure calendar serendipity; Henry Blodget invited my to come on TV the next day to repeat the message, and that was literally the day of the lows.2 My reward was 100s of people asking me to manage 100s of millions of their dollars.

• At a conference in Coronado Island, I sat at the pool next to a young kid named Josh Brown. We started to chat, and it was clear to me he was something special, overlooked by Wall Street. Bringing him from the Sell Side to the Buy Side was an easy decision – precipitated by the random choice of which poolside lounge chair I picked.

• Launching the firm, Ritholtz Wealth Management, in September 2013 was an inevitable result of 1) my frustration in working for other people and 2) my frustration with how Wall Street managed client monies. Oh, and launching 6 months after a new bull market started – signified by every major index leaping above their prior 2000-13 highs – as one of the best 15-year periods (and counting) of returns (2010-2025) was ramping up? Pure chance.

There were other somewhat random events that led to good outcomes:

-At my High School Senior Prom, the "last song" of the night was announced. I turned to the girl sitting behind me and asked her if she wanted to dance — and to my surprise she said "Yes." That "girl" has been my wife for the past 34 years…

-In the summer of 2003, I was invited to beta test Six Apart’s “Typepad” – this new thingie called a “blog.” I moved my publishing from Geocities to Typepad and named it after William Goldman’s book, "The Big Picture.” That was 44,000 posts ago. But for someone noticing my real-time notes about what happened on September 11th, this would not have happened.

-My mom was a real estate agent; that’s how and why I began tracking various housing data points in the 2000s. (Most of Wall Street did not follow RRE closely).  But for that, I would not have noticed that the 2000s economy was kinda backwards – it was being driven by ultra-low rates and real estate, not true economic growth.

-My real time coverage of the great financial crisis was eventually turned into the book “Bailout Nation,” published in 2009. That led to a column on Personal Finance and Policy for the Washington Post beginning in 2011. From that, came a Bloomberg View column, and then in the spring of 2014, I began a...