Most people know Seth MacFarlane as the American TV producer, filmmaker, and singer. He’s responsible and perhaps best known for his work in creating the witty and satirical series, Family Guy. Seth also had a major role in securing the funding for and producing the 2014 reboot of Carl Sagan’s classic, Cosmos: A Spacetime Odyssey—now hosted by the brilliant astrophysicist, Neil deGrasse Tyson. But setting all his career success aside, most people don’t know that Seth MacFarlane escaped death by a margin of ten minutes in one of the craziest, hauntingly lucky survival stories of September 11, 2001.
Seth is an alumni from the Rhode Island School of Design. The day before the attacks, Seth gave a speech to current students, and decided afterwards to go out drinking with his old acquaintances and professors. Seth was scheduled to fly back to Los Angeles the next morning on American Airlines flight 11, at 7:45 AM. But, thanks to his hangover and a timing mistake by his travel agent, who for some reason had the departure time scheduled at 8:15AM, instead of 7:45AM, Seth just missed the flight by ten minutes. After rebooking himself on the 11:00AM flight, Seth went to the lounge to take a nap. When he woke up 45 minutes later, he looked up at the TV above the airport lounge bar, and saw that American Airlines flight 11, the plane he just missed, had crashed into the North Tower of the World Trade Center.
Seth called his family to let them know he was okay and not aboard flight 11, as scheduled. At the time, Seth says that he never really felt panicked by his near miss with death, because the situation was still unfolding. Seth also says he was no stranger to missing flights, and the idea that this particular flight was any different doesn’t cross his mind. But still, the pure dumb luck of such a close encounter would make me think long and hard about my life.
Luck is Out of Your Control
When I think about the true meaning of the word, “luck,” I imagine something beyond my control. For one, if there were some aspect of controlling luck, you’d call this skill. This is how professional poker players earn their living. If poker were purely based on luck, any random person could make a run and win the World Series of Poker. Yet, year after year, you see the same faces finishing in the top twenty spots. For example, Phil Hellmuth has won 14 WSOP bracelets–more than anyone else, and appeared at the final table 54 times. If it were just a matter of luck, these results would be way more random.
This argument of luck and control was also made by Warren Buffett in his 1984 essay, The Superinvestors of Graham and Doddsville. Buffett raises the example of a hypothetical coin-flipping competition. If you asked a large enough sample (everyone in America or 300 million) to predict and flip a coin, each day, about half of these people would be right. If you kept doing this and asking the winners to flip again the next day, eventually you’d get to the point where somebody would have been right ten days in a row. These people then might start talking about their gift of coin-flipping and write a best-selling book on how to predict and flip coins, when in reality, you could argue that the secret to their success was pure luck.
This is not the case with investing. As Buffett describes, if you were able to prove that a small slice of the coin-flipping winners shared some common origins, it would add in an extra variable which mitigates the random luck theory:
In this group of successful investors that I want to consider, there has been a common intellectual patriarch, Ben Graham. But the children who left the house of this intellectual patriarch have called their “flips” in very different ways. They have gone to different places and bought and sold different stocks and companies, yet they have had a combined record that simply cannot be explained by the fact that they are all calling flips identically because a leader is signaling the calls for them to make. The patriarch has merely set forth the intellectual theory for making coin-calling decisions, but each student has decided on his own manner of applying the theory.
In the case of stock picking and value investing, the “superinvestors” share the common thread of Benjamin Graham. Thus, if all the winners share and practice the same ideas and achieve similar results, it demonstrates a factor of influence over the situation and so these results are not attributed to dumb luck. That’s not to say that luck doesn’t play its part over a long career in money management. It most certainly does. But it must not be confused with skill and only be attributed when appropriate.
How Luck Changed the Career of Howard Marks
Similar to Seth MacFarlane, the course of Howard Marks’ life was also changed by the luck of a hangover. The legendary value investor and founding partner of Oaktree Capital, was supposed to receive a job offer to go to work at Lehman Brothers. But thanks again to a little too much alcohol, the guy who was supposed to call Marks to offer him the job forgot to reach out. So Marks accepted a job at Citycorp instead. There, he was assigned a very obscure asset class to study, which heavily influenced his investing philosophy and eventually presented subsequent investment opportunities which he would build his career upon. In the video below, you can watch William Green, author of The Great Minds of Investing recall this comically “lucky” event.
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To some degree, there’s always a component of risk that is beyond all control. For example, a meteor could come flaming down from space and obliterate a factory of the business you just purchased. You wouldn’t blame yourself for this mistake, it’s just bad luck. True luck is beyond our control, but there’s another side of luck that involves recognizing opportunities. In this regard, you can prepare yourself to be in the right place at the right time.
“I am a great believer in luck, and I find the harder I work, the more I have of it.” – Thomas Jefferson
How to Make Your Own Luck
A lucky break is by definition unpredictable. But you can control your exposure to benefit from luck. For example, the odds of winning the lottery in the state of California are approximately: 1 in 15 million. So, the person who buys a single ticket knows that she stands an astronomically small chance of winning. But imagine for the sake of the example that instead of buying just one ticket, you bought 15 million tickets. You wouldn’t guarantee yourself a winning ticket, but the odds would now be stacked in your favor to win. When people work ridiculously hard only to discover that suddenly, “lucky opportunities” start presenting themselves, I’d argue that what’s really going on isn’t random. Rather, the person has tipped the odds.
Don Fitzgerald manages the Tocqueville Value Europe fund, based in Paris. In our interview below, Don discusses this very idea of a recent position which came as the result of a “happy accident” from his patience and diligence.
And some investing opportunities come in and an accident happens so with TGS Nopec there’s a bit of an accident. I looked at TGS Nopec around three years ago, right at the time that the Macondo spill happened in the Gulf of Mexico, the Gulf of Mexico was a large part of their business historically. The stock got beaten up.
But I wasn’t familiar with the business, it took me be too long to get up to speed to actually make an investment decision. With time, now I know TGS Nopec, it’s having an accident again, and because I’ve done the work before I can react more quickly. There’s an experience effect or I’ve been there, done that before effect, which makes things a little bit quicker, so that’s the learning effect.
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Is Don Fitzgerald lucky? Or, was he prepared? Had he not been intrigued by TGS Nopec earlier in his career, he wouldn’t have familiarized himself with the company. And even though he didn’t take a position at the time, Don was ready for the next opportunity. To me, this is a perfect example of making your own luck. You don’t know what cards the future will bring, but you can learn how to play the game no matter what you’re dealt.
Luck is always one of those concepts that gets tossed around without careful thought. But the more you think about it, the more you realize that pure luck is attributed to circumstances outside of your control–often when there’s unlikely odds. Luck is very different from skill, in that no amount of training can change your luck. Luck is unbiased and unfair. Luck doesn’t think or have favorites. It just happens.
Stories like Seth MacFarlane’s or Howard Marks’ can really make you think just how much the role of luck influences your life. For some, it actually means the difference between life or death. While scary to dwell on, it would seem that the best and only thing you can do to change your luck is to to be as prepared as possible for whatever comes your way, and to try to tip the odds ever so slightly in your favor. As all great investors know, over a long career, these small percentages add up significantly. So, all you really have to do is hang in there long enough.