[mattkrause]

You also don't know how you stack up in the tournament. The people entering graduate school have usually done really well in undergrad. However, being in the top 1% (or whatever) of that small pool provides you with a lot less information than you'd think about your prospects in a pool of people who were also in the top 1% of their own undergrad classes.

Repeat for grad school->postdoc, postdoc->tenure track, and so on.

[selectron]

I agree completely. I also think there is way more luck involved than people want to admit - a lot interesting results are unexpected, and there are so few jobs the timing has to work out for you. I have known plenty of great post docs who couldn't get a Professor job, and plenty of Professors who seem pretty mediocre.