Monday 25 June 2012

Michael Lewis: Here's to success and oh, lots of luck

By Goh Eng Yeow, The Straits Times, 24 Jun 2012

In a recent speech to fresh Princeton University graduates, Mr Michael Lewis, the author of financial bestsellers such as Liar's Poker and Moneyball, outlined the important role which luck plays in our lives, using his own life experience as an example.

He said: 'My case illustrates how success is always rationalised. People really don't like to hear success explained away as luck - especially successful people. As they age and succeed, people feel their success was somehow inevitable.'

Recalling his roots as an art history major, he admitted that like many fresh graduates, he had gone to business school because he had no idea what to do with himself when he left Princeton 30 years ago.

But one night, as a graduate school student, he found himself seated next to the wife of a big shot at Wall Street investment bank Salomon Brothers, who then 'more or less forced' her husband to give him a job.

'When I got there, I was assigned, almost arbitrarily, to the very job in which to observe the growing madness: They turned me into the house expert on derivatives. A year and a half later, Salomon Brothers was handing me a cheque for hundreds of thousands of dollars to give advice about derivatives to professional investors,' he recounted.

The point he wanted to make was that 'Wall Street had become so unhinged that it was paying recent Princeton graduates who knew nothing about money small fortunes to pretend to be experts about money'.

He felt that he had to write about the hypocrisy there and then, even though he was 26 years old, and his father had suggested that he should stay on, and make his fortune first, before moving on.

'The book I wrote was called Liar's Poker. It sold a million copies. I was 28 years old. I had a career, a little fame, a small fortune, and a new life narrative. All of a sudden, people were telling me I was born to be a writer. This was absurd,' he observed.

And he noted that there was 'another, truer narrative with luck as its theme': What were the odds of being seated at that dinner next to that Salomon Brothers lady? Of landing inside the best Wall Street firm from which to write the story of an age? Of having been let into Princeton in the first place?

Mr Lewis also recounted that in writing Moneyball, the sequel to Liar's Poker, he noted that the richest baseball teams ought to win all the time because they could buy the best players.

But that did not happen because the rich teams did not really understand who the best baseball players were. And the main reason they were misvalued was that the experts did not pay sufficient attention to the role luck played in baseball success.

Don't be deceived by life's outcomes, he said. Life's outcomes, while not entirely random, have a huge amount of luck baked into them.

'Above all, recognise that if you have had success, you have also had luck - and with luck comes obligation. You owe a debt, and not just to your Gods. You owe a debt to the unlucky,' he said.

Mr Lewis' brief mention of the unlucky opens the door for me to produce an e-mail from a reader whom Lady Fortune seemed to have deserted completely.

Like Mr Lewis, he decided to follow his own path and left an eight-year banking career to try his hand at various businesses from operating a cake shop to doing consultancy work.

Taking a route less travelled was challenging with endless disappointments but it also offered a taste of 'sweet success with good faith, hard work and lots of luck', he said in the e-mail.

But financial disaster struck last year when he lost his life savings in the stock market crash, which made it a challenge just to put food on the table.

'I never thought I would end up in such a state since I have always been prudent financially. Some friends are supportive, some question you. Some laugh at your predicament. Some would even avoid you for fear that you may try to borrow money from them,' he said.

And with mounting bills, zero financial reserves and four mouths in the family to feed, his state of mind was like that of Tom Cruise's character in the movie Top Gun losing a wing man.

'I now understand and accept why some people in the face of adversity choose to end their lives, or commit criminal activities in the hope of solving their financial difficulties,' he said.

But he ended his e-mail on a positive note: 'I have also read how some people manage to dig themselves out of their failure to relive a better life. Life has no rehearsal. It is an action-packed movie with you as the lead actor playing out the script every day.'

In his advice to the new Princeton graduates, Mr Lewis told them that they were the lucky few. 'Lucky in your parents, lucky in your country, lucky that a place like Princeton exists that can take in lucky people, introduce them to other lucky people, and increase their chances of becoming even luckier.'

I would add this proviso: If you should meet someone down on his luck, try to give him a hand. Life is so full of uncertainties. Lady Fortune may smile on you one day, but desert you the next. Even lucky Princeton graduates need all the breaks they can get.

No comments:

Post a Comment