What is The Hidden Role of Chance in Life

Introduction

Do you feel that you have complete control over your life?  Do you feel frustrated, annoyed, and angry when things do not suit you?  Or you shake your shoulders and say "this happens so often."


What is The Hidden Role of Chance in Life


No matter how much we try to control things, randomness is one thing that cannot be eradicated.  Randomness means something by chance, something sudden that cannot be said beforehand.


Every action you take has many possibilities.  This world is quite complex, so it gives you a complex probability.


In this book, you will learn about the profession which depends on knowing how to handle probability.  


You will learn why analyzing probability is not a part of evolution or development and what it means.


You will also know what you can do in that situation when randomness decides your fate.


So let's start this journey and see what effect this probability has on our lives.


If involved so rich, why are Aren you so smart?


How scary is it to hear the names of economy, stocks, bonds and many financial terms?  But the two characters of our story Nero and John loved these scary things because it was their profession.


Both of them were traders and used to buy and sell almost everything.  Even though the work of these two was the same, but both handled the probability or chance differently.


Probability is an important part of every field, so it is not just about the stock market.  The demand and supply of the market keep changing with more speed than our blink of an eye.  Therefore, if you want to become a trader, it is very important to know the right approach to look at the probability.


Nero was a Tulip Professor and hated his job.  He used to get irritated by sitting in those dull meetings or sitting at his desk all day.  One day Nero became very excited after passing by the Chicago Mercantile Exchange - where the business is trading.


He saw how many wealthy traders were walking around talking on the phone with confidence.  Just then he decided that this work was made for him only.  Nero wanted adventure and excitement and there is no shortage of it in the financial industry.


Instead of focusing everywhere, Nero started focusing on a special branch of trading.  His focus brought colour because he had started earning a lot of money in a short period.  It seemed as if it had become an instant hit as soon as it came in the market.


Now there is a competition to get his service in the trading companies.  Because Nero used to take every decision very carefully, after studying the market and took action, Nero stayed away from the market after hiding for a few days.


He did not want to be like those fast-paced traders who were always busy and were becoming arrogant with each passing day. Nero wanted to live in an environment where he could study the trade market well.


So Nero now started doing Proprietary trading.  Proprietary trading occurs when a trader trades stocks, bonds or any financial instrument with the firm's own money and not with depositors' money so that it can earn profits for the firm.


Nero was still an employee of a company and traded with his money.  But that set-up was made in such a way that it would not be wrong to say that Nero Self was employed there.


Nero was so adept at his work because he used to take probabilities seriously.  He used to spend his income very wisely and also used to deposit some of it in a savings account.


He and his wife used to live in a common and modest house and used to decide what they should buy and what not with great practical thought.


One thing that makes it different in the financial market is that you can get rich fast.  If you are adept at persuading or persuading people or companies and can sell anything easily, then you can earn a lot of money from it.


For example, if you invest your company or your own money in a constantly growing new product, your money will double or triple as soon as that product does a good business.  But there is another aspect of this deal as well.


If you spend too much money on a product and the market suddenly crashes, then you will lose all your money.  Due to the market crash, many times the traders also get drowned in debt.


They rely too heavily on the probability that they will always get rich with every trading opportunity but ignore the chances of losing.


But Nero was very smart, he never took the risk by putting too much money on himself or the company.  Yes, taking too much risk means that you will earn a lot in return, but in this situation, the chance of losing money will be equally high.


Therefore, Nero was not as rich as many other traders.  He used to set a fixed amount for how much money he would trade.


John on the other hand was opposite to Nero.  Apart from being more money than Nero, John was living a very rich and comfortable lifestyle.  


He always used to buy something new and very expensive.  He used to show off so that people would know that he had a lot of money.


Nero and John were neighbours and knew each other.  It was good to keep distance from traders like Nero John.  John took huge risks in his career by investing a lot of money.


Often those risks were in his favour, so that money was being earned.  In investing a lot of money, it has been seen that you get addicted to it.  Often a person forgets that there is also the possibility that he can lose everything.


And this is exactly what happened to John once.  He invested too much money and the market suddenly crashed.  Worse still is when John is removed from his job.


Always remember one thing that no matter how small the probability is, there is still a chance of it becoming true.


Can Evolution be Fooled by Randomness?


Carlos was a successful trader.  He studied economics, so he was good at trading.


Knowing how the economy works and the art of moving money from place to place is a tremendous combination.


Due to this deep knowledge, the company, Investor, all started the line to take service of Carlos.  Carlos earned several million in a year, along with it he got a promotion in the job.


The summer season began and Carlos lost $ 300 million in a very short period.  Losing this money began with his ego and denial of the truth.  


It is common to have ups and downs in the market.  Traders and economists such as Carlos undoubtedly keep this in mind.


Whenever a sign of a market was going down, Carlos would start buying from there.  This was his technique.  


He knew that the market would go back up and usually the value would go up after that.  So when the market for Russian bonds was falling, Carlos bought many bonds.


At that time the average Russian bond was valued at $ 52.  So if the market had gone up, as Carlos had predicted, it would have earned more than $ 100 million. But during that time the market was going to fall and there was no sign of its growth.


In the last week of June, the value of the average Russian bond reached less than $ 48 and by July the price had dropped to $ 43.  


Now the bonds that Carlos bought were of little value.  If he had sold it at the price he bought it for $ 43, he would have suffered more.


By August, the value of the bonds hovered around 10 $ and Carlos was fired.


Even if you are an expert in a field, there is a possibility that you can misread the market and your investment can fire back.


Carlos relied on his ability to analyze the economy.  This thing worked well for him in the last few years, but the economy never works the same.


Therefore, there is always a chance that you will miss some factor that causes damage.


Many times we make the mistake of thinking that because a trader is earning well then he will be an expert in his work.  But there is a reason why a trader is good at his job - that reason is randomness.


Carlos started trading when the market was at its peak.  The market usually goes through a cycle in which it grows considerably by coming to a point.  


At that point, the market grows and the traders who participate in it also earn a lot of money.  This is why traders often become successful.


When it comes to companies and business, it is believed that being competitive, determines who is the best.  If your company is performing well, then you can easily beat other companies.  Those who are not so good, stop.  But this is not always the case.


The same thing applies to evolution as well.  Those who survive alive are not necessarily the best. There is always randomness in our world. With randomness comes negative mutation.


These are the traits that have remained to date despite being evolutionary.  They do not last long and end in the end, but they are passed on to several generations.


Similarly, just because an animal survived alive does not mean that it was the best.  Every animal on average can be fit to be alive.


But the point here is that due to negative mutations, not every human being will be fit to stay alive.  Something similar happened to Carlos.


He was the best Survivor in his profession, but he came in such a situation that tested him how good he is in his work and the sad thing is that in these situations it was found that he was not the best.


Too Many Millionaires Next Door


Mark was a successful lawyer in New York City.  He lived on Park Avenue with his wife Janet and three children.  That area was filled with rich and successful people.


However, Mark was very good at his work and used to get a decent amount of salary, yet he was living a normal and ordinary life with his family.  His family was quite different as compared to his neighbours.


It would not be wrong for Mark to come out of Harvard and Yale Law School to say that he was very intelligent.  


His intelligence gave him success and he achieved a special position for himself by getting a position in a well-known law firm in New York.


However, this job required a lot of hard work and time but Mark was also growing in such a stressful and competitive environment.


Mark's children attended a private school where Janet met the wives of the rich and famous businessman.  Despite Mark's good salary, Janet began to think of herself in her mind


That his family was the poorest in that entire area.


His neighbours often attend high-profile social events and visit new foreign locations to celebrate the holidays.  The women used to do a lot of big diamond ring shows and their husbands used to buy expensive cars.


Now looking at Mark's background, do you think he was poorer than his neighbour?  Was he not as successful as those fancy Wall Street businessmen or restaurant chain owners?


This is a great example of survivorship bias.  Janet compared her husband with the wrong people.  Mark was performing better than 99.5% of the people compared to other American citizens.  Even he was leading a better life than his school friends.


During his time at Harvard, Mark had more than 90% of the money.  At Yale, he was outperforming 60% of all students.  Mark was number 1 among these people but compared to his neighbours, he was slightly below them.


This bias, that is, when we believe something in advance without understanding it based on facts and logic, it always forces us to compare ourselves with those above.  But it does not ask you to compare with those below.


In Mark's case, Janet showed the same bias when she compared Mark with people in front of whom Mark's achievement seemed small.  Instead, if she compared Mark with his school friends, she would have found Mark's achievement very large.


The best selling book The Millionaire Next Door tells about this.


The authors of that book studied many rich people because they wanted to know what was the quality that was common among all of them.  This book claimed that rich people do not look like rich people.  They do not have time to buy clothes or expensive things.  Rich people spend their time making more money.


That book wants to tell that just because someone looks rich does not mean that he is really rich.  But the authorities themselves showed that bias when they started that study.  


The rich people whose sample he included in his research were such people who remained rich till today.


They did not include the rich who had gone bankrupt or who had lost everything.  


This book also ignored the fact that some of these people had a lot of wealth because they were lucky that they had invested money in the right place.  So we can see that probability exists everywhere.


Randomness and Our Brain: We Are Probability Blind


Imagine that you have a choice of two places to go to vacation - Paris or the Caribbean.  When you think of both options, you imagine the romantic and heart-rending view of the Eiffel Tower.  


But you also get lost in the thoughts of the soothing air and the warm sun while sitting in the Caribbean.


You know that out of these two, you can choose only one option, so the probability of going to both these places is 50%.


Now how clear things are here, but here things also become interesting.


Can you imagine enjoying yourself in both places?  Can you imagine yourself swimming in the Caribbean sea and getting soaked in the soothing rain of Paris after getting out?  This is impossible, isn't it?


This is because it is difficult for our mind to deal with two or more probability. After all, one probability is usually more dominant than the other.


Another example of this is, in the first chapter, when Nero was told by the doctor that he has cancer, he said that there is a 72% chance that Nero can be cured of that disease.  Although there was still a 28% chance that Nero could die.


Now here Nero chose to focus on a 72% chance of being alive.  Even after the diagnosis of cancer, his outlook remained positive. 


Now here Nero's thinking that he will be 72% alive and 28% will die is impossible.


We can only focus on one possibility at a time because we have evolved in this way.  


Our ancestors from about 3,000 to 5,000 years ago did not have as many options as today.  During his time, travelling was also very difficult.


There was no transport facility to come and when there was a famine or drought, nothing could be said about that.


So getting out of my place of residence was not safe.  He used to be confined to his village and hence knew very few people.  


Life at that time was quite simple, so the probability was less in front of our ancestors.


Today, even in this modern time, we do not understand much of the possibility because our ancestors did not have to deal with it and they passed it to our generation.


There is another reason why we cannot handle multiple probabilities, that is the reason of biology and our way of thinking.  


We have very little understanding of our understanding i.e. understanding and probability.


We just think about keeping ourselves alive.  Sometimes we try to understand the probability but it is simple, not complicated.  This means that we only accept the probabilities that are related to our being alive.


Bacchus Abandons Antony


Now when you know how profound the impact of probability is and how disappointed we are when facing it, how are you feeling?  Will you now accept the "This is life" attitude?


Or you will hold tight to your belief that you can control everything that happens to you.


The 2nd option was chosen by the French writer Henri de Monthalernt.  Once after visiting the doctor, he came to know that he was about to lose his eyesight due to an illness.


In this situation of probability, Henry decided to take his own life.  Henry's view, in this case, was that if something untoward happens, he will not accept his luck but will try to control it, which was impossible in this case.


Although we often do not have control in unexpected situations, do not worry.  You can compare it to a great hero about whom we often read in stories.  Even if the fate of the hero is not so good, he is praised.


This is because the other characters in the story were judged for their action, not their results.  You can decide how you will face an unexpected situation.


In many situations, we cannot do anything, in that condition it should be accepted peacefully and should try to control the things which are under our control.  


This is what the Greek poet Cavafy tried to explain in his wonderful and famous poem about Mark Antony, who was defeated by Octavius ​​in the battle.


Antony was defeated because Bacchus, the god who protected him, suddenly left him and went away.  Antony broke down with this defeat.  Even a man said that Antony's horse had also left him.


This poem consoles Antony and says that accept this defeat with all due respect because the probability of winning was not under his control.


This poem tells us about the feelings of Antony that he was feeling during that time and tells him do not to suppress emotions because no matter how much we want to avoid them, these emotions make us human.


Even if your luck does not support you, but face every bad experience with peace and courage.  


No matter how bad the time is, if your vision is correct, then that time will also pass properly.


If you get any bad news about your health, do not pity yourself.  Treat it in such a way that people remember your action, no matter how bad the result is.


CONCLUSION


So you learned about the profession of a trader and understood that in this profession there is a need for people who know how to analyze probability wisely.


Pay attention to your risk exposure in the financial market, do not be overconfident about your decision or skill and remember that a situation can have many possibilities or consequences.  


Do not try to deny that randomness and luck also have a hand in both profit and loss.


You read about Nero, how he thought about his chances of getting very rich and very poor and he chose to stay in the middle.


You know how unpredictable the market is and the same can be said for the world.


You also understood that no matter how big an expert you are, no one is just ahead of randomness.  


Of course, you can do a prediction further by looking at the old trend, but nothing is fixed here and there is nothing called a guarantee.


You also understood that it is only because if any animal or any company of animals can go live, they will be the best.  Evolution also has many side effects.  Many traits or behaviours pass from one generation to the next while they have no clear motive.


You learned about survival bias how it changes our perspective.  Survival bias means comparing a person or company with something that is already very successful.


It is obvious that if you compare yourself with successful people, then you will consider yourself to be a failure.  


But when you compare yourself with people of your level, you will get a different result.  Then maybe you become a winner.


You also learned that it is difficult for us to think of two or more probabilities due to evolution.  We find it very difficult to face this randomness of our life because our ancestors did not face many probabilities which we have to face today.


Do not be disappointed by how little things are under our control.  Although randomness makes its impact, the control of taking action is still in our hands.


Life constantly surprises us.  Even though we get angry sometimes but this randomness also makes it interesting.  


Being unaware of what is going to happen next creates a sense of excitement in us.  Randomness brings both good and bad things.


Nicholas Sparks once said that if you think that nothing can be worse than this, then it happens but it can go in any direction, positive or negative.


 If you feel that something cannot be better, it can still happen. So embrace whatever randomness comes your way.  Life is not less than a puzzle, so be prepared for unexpected things and accept them with an open mind.

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