How to build wealth? Better to be smart than lucky

A preferred way to build wealth is to place many small bets on events with favourable odds

The need to understand probability and the need to diversify are two important concepts in investing. PHOTO: PEXELS
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"I'd rather be lucky than be smart!" A lecturer in fund management for my Master of Science in Applied Finance course used to repeat this mantra in class. He used to say that some seats were luckier than others on the trading floor. And traders who occupied those seats usually did very well.

The idea that you needed luck to succeed seemed like a good excuse. The fairy tale-like life of Forrest Gump, depicted in the hit movie starring Tom Hanks in the 1990s, added gloss to the notion. Wouldn't it be nice if we could stumble through life like Gump, and serendipitously encounter one positive event after another?

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