Betting On Yourself
Brian is a Contributor for TCW, an Analyst at TD Securities, business undergrad, and a former exchange student from Singapore, where he travelled 7 countries.
A man walks into a casino in Vermont, California. He’s been on a stupendous winning streak with roulette, garnering maximum payouts from the past 7 casinos that he’s been to in Las Vegas. He was starting to build a reputation for himself, with casino employees keeping close watch of his movements. It’s not a surprise that he was under scrutiny, as many would assume he’s been cheating. The truth is, however, he’s been completely riding on luck. No under-the-table aid, no experience, and certainly no skill.
He was feeling fortuitous and he believed his run of luck wasn’t stopping anytime soon. He decided to play high stakes roulette again, a game that was befitting for high roller players. Stepping inside, he bought a stack of chips from the dealer and proceeded with his game. By the end of the night, he was baffled by the results. He lost badly. “How could this be happening? I should be winning!” he said loudly in his head.
He paused in shock for a few minutes, composed himself, and grinned at the dealer and the people around him. “Don’t worry, I’ll be back tomorrow and I’ll win everything back.” He said with a smirk. The next day he returned, ready to splurge the prize money he got from his previous casino wins. The result, unfortunately, remained the same. He lost a significant portion of his newfound wealth, and this time, he became incredibly frustrated and confused.
“Losing twice in a row? This is outrageous! I’ve been winning for weeks!” he yelled. He could not believe nor accept what had just occurred. It did not make sense to him. He continued with his trip to the casino the next day and this time, he depleted all of his money. He was in utter despair and he ultimately regretted his decision to step foot into the casino. With a blank face, he planted himself on a stool in the casino lobby.
A local gambler stared at him and slowly approached him. He has witnessed the series of events that occurred in the past few days. Handing him a $100 bill almost out of pity, he said, “I know you’re on a bad run. Maybe you should give it another shot. You can’t lose forever.” The man was silent for a few seconds but took the gambler’s offer. He was confident that he would lose due to his recent streak of losses but changed his mind. ”Hell, I thought I was going to win when I first came in. Streaks mean nothing to me now,” he muttered. He was playing red or black roulette, a simple game where there was an equal 47.4% chance of the roulette ball landing on a red or black slot. Once again, he tried his luck and placed his bet on a random color. The ball swiveled and spun around the wheel, eventually landing on black, the color he placed his fate on.
His eyes widened. ”I actually won,” he said quietly. The gambler laughed and congratulated him. “Maybe your luck is turning back. You feel a streak coming?” he asked with a smile.
“No, I think I’ll settle with this. Maybe I’ll come back when I really know how to play this game,” the man responded. He thanked the gambler, repaid him from his small payout, and walked off.
The story above is based on the “hot-hand fallacy”, or the “hot-hand phenomenon”. It’s a faulty concept that suggests that a person who encounters a certain result or success from a random event will have a higher chance of obtaining that same result in additional attempts. It’s a psychological behavior that is common in sports such as darts or basketball, but also in day-to-day applications as well. People expect things to re-occur if it has happened consistently before. A hypothetical scenario for you to ponder over:
You know of someone who has been struck by lightning three times before and he has luckily survived through these occasions. Would you believe he’s more likely to be struck again? Would you believe that he’ll be okay this time around? You’ll fear for him or be deeply concerned, but I’m certain that at the back of your head, there is that increasing glimmer of hope, belief, or reassurance that he will be fine. Not because he has a tougher build or he’s been through a survival training camp, but because he’s made it through before, time and time again.
There is a fine line between optimism and naivety when we place our confidence in something that is outside of our knowledge and control. The purpose of the short story is to set the boundaries between optimism and naivety and to bridge the gap between expectation and reality, either it is for things that are within or outside our capabilities. Not all things are governed by random events but at the same time, there are miracles or unfortunate events that can tip the balance of your life. When a wonderful revelation repeats itself a few times, you’ll feel that it’s not a surprise anymore and you almost take it for granted. On the other hand, stumbling on a few consecutive misfortunes and you’ll think you’re forever a Bad Luck Brian.
Life is a turbulent road. As cliché as it sounds, there’s a bunch of rocky bumps, but there can also be smooth paths where you can just gas it. Take your chances and opportunities with gratitude because a blessing could’ve just as likely been a curse, had the coin landed on the other side. The man in the story went through various runs of fortune. He believed streaks logically dictated his results, which is a fallacious belief. At the end, however, he acknowledged that relying on luck was not sustainable. Maybe if he learned a few techniques or mastered a different game such as poker, where it’s also about tactics and not just about luck, he’ll actually improve his odds of winning.
There are certain things that are within our abilities. If you keep practicing on your free kicks, you’ll realize that you’ll be getting “luckier” with each shot. Keep working hard and you’ll see more and more people reach out to you for job opportunities and promotions. If you understand the mechanisms in achieving that desired result or success and diligently work hard at it, then it’s not just a lucky break. This applies to everything we do. Appreciate fortune if it is on your side, but if you get the short end of the stick, work through it and wait for your next stroke of luck. It could be very soon or it could also never happen. However, at the very least, that’s not something you need to worry about.