[vannevar]

What is the publicized formula for success?

Generally something along the lines of 'work hard, work smart, be persistent.'

Why is Warren Buffet the only one with his level of investment success?

No one knows; that's the point of the article. It could be pure chance. Put 1000 people in a room and have them each flip a coin for double or nothing, and in the end you will likely have a person who has made 1000x their original investment. Should we laud the winner's coin-flipping ability?

[jeromec]

So, if I understand you correctly, you're suggesting that before Warren Buffet was even born, he was destined to become the successful investor we know? Further, that he shouldn't take any credit for thinking through all his decisions and coming up with the more profitable choice enough to substantially beat out millions of other investors?

To answer your question, no, we don't laud the winner's coin flipping ability, because, in the absence of cheating, the person's actions and decisions don't influence the outcome. All participants have an exactly equal chance at being the end winner, and nothing will change that. However, some savvy investors, like Warren Buffet, are able to ensure they win over others using the stock market; the difference being that their decision making does directly influence whether they "win" or "lose".

It seems to me you're suggesting investors could use coin flipping to make all investment decisions, and that makes as much sense as trying to decide by other means, since they don't know what they are doing anyway. Correct?

[vannevar]

I said nothing about pre-destination, and Warren Buffet is free to take as much credit as he likes. I'm supporting the gist of the article, which is that complex phenomena like economic systems are much more like coin flipping than they are like dropping an object and predicting it will hit the ground. Contrary to what you say, the coin-flipper's actions and decisions do influence the outcome: he has to decide to keep playing, and he has to decide whether to call heads or tails. The difference is that the system is comparatively simple, so we easily see that chance alone determines the outcome. Barring cheating or a systematically biased coin, we can't imagine how it could be anything other than luck. On the other hand, investments are wrapped in much more complexity, and it's easier to imagine that there are skills that could confer an advantage, even if there aren't.

[Y]ou're suggesting investors could use coin flipping to make all investment decisions, and that makes as much sense as trying to decide by other means...

I'm not suggesting it, but now that you mention it there are some studies that do. I suspect there are real investment skills that can be learned and applied, much the same way a blackjack card counter gains a small edge that can be exploited over time.

[jeromec]

Warren Buffet is free to take as much credit as he likes

Let me rephrase the question: Would you give Warren Buffet credit for his investment success?

he has to decide to keep playing

You said "in the end" which I took to mean the coin flipping would continue until only one winner remained of the 1000.

and he has to decide whether to call heads or tails

To ensure we are imagining the same crucial parameters let me clarify these points: first, the coin itself is not biased in any way; second, the flipping action is not biased; it could be carried out by a mechanized flipper, for example; third, the choice of heads or tails is always made before the flip. Under these circumstances the actual calling of heads or tails does not matter. The caller will always have exactly a 50% chance of winning and losing.

I suspect there are real investment skills that can be learned and applied, much the same way a blackjack card counter gains a small edge that can be exploited over time

Well, that's the first thing you've said I can easily agree with. Yes, I certainly believe, given enough time, Warren Buffet could teach someone to follow his methodology to have nearly identical success. So which is it? Is Warren Buffet someone who knows what he's doing or not?

[vannevar]

Would you give Warren Buffet credit for his investment success?

For making a good living, yes; I think that much was in his control. For becoming a billionaire? No, there were far too many variables involved that were not within his control.

I certainly believe, given enough time, Warren Buffet could teach someone to follow his methodology to have nearly identical success.

I think Warren Buffet could teach someone to have some success, I don't believe he could teach someone to be a billionaire because becoming a billionaire depends in large part on chance. Most professional card counters never became rich either, they just made a good living.

You seem to be viewing the article as discouraging, while I see it as encouraging. While it means that much of our prospects for success are beyond our control, for the most part we have as good a chance as anyone, so get out there and do something.

[jeromec]

For becoming a billionaire? No, there were far too many variables involved that were not within his control.

Well, yes, I can agree nobody can completely know or control the future. One may become terminally ill, or the Earth may be hit by a meteor at any time. However, that was not the argument made by the author. It was that none of us knows what we're doing. He seems to suggest we have little control over the outcomes which we do see, saying things like Nobel Prize winners are "winging it", as if they have the same understanding as anyone else (in this case none) when it comes to their expertise. I find that highly disconcerting.

If we imagine a chess match, where we know the duration will be a few hours, and the fitness of the players will not be compromised for the game duration, we can understand the winning or losing outcome is entirely in the hands of the players. If we further imagine the best chess player in the world accepts this match, and both players fully intend to win, if the best player wins would you agree it is because he (or she) does know what he (or she) is doing?

[vannevar]

I do think the author overstated the case; I think when he says a Nobel prizewinner is 'winging it', I interpret it to mean in their process of coming to understanding. By definition, people like Nobel prizewinners or billionaires had multiple turning points in their careers where they made decisions under uncertainty. And by definition, uncertainty means chance is involved. At those points they were winging it and could easily have been wrong. Just like our coin flipper.

Similarly, in a championship chess match there will be points where even the most skilled player in the world may be uncertain as to which move is best. At those points, they too are winging it. If they intuitively make the best move without being able to fully explain why they are making it, does that not prove the author's point?