5 ms·

A Hacker News comment about entrepreneurship, darts, and wealth goes viral

21 points by DantesKite 4y ago

credit_guy 4y ago
This appears to be a repackaging of an old metaphor designed to illustrate the Efficient Market Hypothesis: that someone can outperform professional portfolio managers by hanging the Wall Street Journal on the wall, and throwing darts at it. Someone did go to the trouble of training a chimp to do just that, and the chimp entered the Guinness Record Book for outperforming all but 22 managers in 1999 [1]. But while chimps may outperform thousands of managers for one year, they won't outperform a Warren Buffett or a George Soros for decades. The claim that Buffett's and Soros's performance is due to luck can be easily debunked nowadays after the Covid 19 pandemic. Now lots of people understand p-values. By this I mean lots compared to before, in absolute terms it's still too few people who understand null-hypothesis testing. Oh, and if you read this and want to shoot me down with some Bayesian things, you can leave it for some other time. In any case, just like you can test if the outcomes of vaccination are due to random chance, you can check if the performance of Berkshire Hathaway is due to pure luck. In both cases you'll get a really tiny p-value, so you can say you decidedly rejected the null hypothesis. In the case with this twit, it's difficult to do a statistical significance test. But consider this: it's undeniable that Warren Buffett's results are not due to randomness, and also Michael Jordan's results, and Tom Brady's results. Tom Brady has won 7 NFL championship, more than the total wins of all the active NFL quarterbacks in the league combined. But guess what, luck is a huge factor in the NFL, for the simple reason that players get injured a lot. The best team at the start of a season can be decimated by the end of it. Still, somehow he won 7 times in 22 years, in a league with 32 teams. Is this due to throwing darts? Then why is Musk's success due to throwing darts? Or Zuckerberg's success? Did Zuck throw and miss, then throw again, and again, and again, and hit the bull's eye the tenth time? No, he succeeded right away, and kept demolishing every obstacle that he found in his path. This dart throwing metaphor is so appealing: "meh, that guy was just lucky, I could've done the same myself, but I just couldn't afford to play the game". But it's also so toxic. [1] https://www.guinnessworldrecords.com/world-records/most-successful-chimpanzee-on-wall-street https://www.guinnessworldrecords.com/world-records/most-succ...
- LinuxBender 4y ago
  Is this in line with the concept of pitting r/wallstreetbets vs a fish? [1] The fish did pretty good in my opinion. [1] - https://www.youtube.com/watch?v=USKD3vPD6ZA https://www.youtube.com/watch?v=USKD3vPD6ZA
- iancmceachern 4y ago
  I dont agree. Zuckerberg is a bad example, he was truly lucky. In my 20 years doing this, my experience aligns with the original comment this post is about. It's healthcare. Unless you can afford to float your household expenses including Healthcare for a year, you can't play in the early stage startup game. It's just simple survival, some of us have to work to survive.
  - credit_guy 4y ago
    I too could never afford to enter the startup game. But the conclusion that those who enter the game and succeed are simply the lucky coin flippers does not follow. Zuckerberg was not "truly lucky". He succeeded where My Space failed. And where the mighty Google failed too (do you remember Google Plus?). It's very comforting to say it's luck, but it just isn't. Also, just so I'm not accused for being a Zuck fanboy, I don't have a Facebook account, and I consider Facebook a borderline evil company, and Zuck quite slimy. But just a lucky guy he is not.
    - SlickNixon 4y ago
      I think the claim would be lucky in terms of time, not execution. Facebook appears to have all the same stagnation problems that MySpace did, with a little more time in the sun because they're entrenched in a static market. Google Plus was late to the same party. Let's also not forget that, when Plus launched in 2011, the competition between the two organizations was Google running for its dinner and Facebook running for its life.
      - credit_guy 4y ago
        > Google Plus was late to the party. That does not diminish the result of Facebook defending its turf. Google then (and now) was the 800 pound gorilla in tech. Facebook resisting the attack, and making Google run with it tail between its legs is not a small achievement.
ranit 4y ago
And the actual HN comment link: https://news.ycombinator.com/item?id=15659076 https://news.ycombinator.com/item?id=15659076

21 points by DantesKite 4y ago

This appears to be a repackaging of an old metaphor designed to illustrate the Efficient Market Hypothesis: that someone can outperform professional portfolio managers by hanging the Wall Street Journal on the wall, and throwing darts at it. Someone did go to the trouble of training a chimp to do just that, and the chimp entered the Guinness Record Book for outperforming all but 22 managers in 1999 [1]. But while chimps may outperform thousands of managers for one year, they won't outperform a Warren Buffett or a George Soros for decades. The claim that Buffett's and Soros's performance is due to luck can be easily debunked nowadays after the Covid 19 pandemic. Now lots of people understand p-values. By this I mean lots compared to before, in absolute terms it's still too few people who understand null-hypothesis testing. Oh, and if you read this and want to shoot me down with some Bayesian things, you can leave it for some other time. In any case, just like you can test if the outcomes of vaccination are due to random chance, you can check if the performance of Berkshire Hathaway is due to pure luck. In both cases you'll get a really tiny p-value, so you can say you decidedly rejected the null hypothesis. In the case with this twit, it's difficult to do a statistical significance test. But consider this: it's undeniable that Warren Buffett's results are not due to randomness, and also Michael Jordan's results, and Tom Brady's results. Tom Brady has won 7 NFL championship, more than the total wins of all the active NFL quarterbacks in the league combined. But guess what, luck is a huge factor in the NFL, for the simple reason that players get injured a lot. The best team at the start of a season can be decimated by the end of it. Still, somehow he won 7 times in 22 years, in a league with 32 teams. Is this due to throwing darts? Then why is Musk's success due to throwing darts? Or Zuckerberg's success? Did Zuck throw and miss, then throw again, and again, and again, and hit the bull's eye the tenth time? No, he succeeded right away, and kept demolishing every obstacle that he found in his path. This dart throwing metaphor is so appealing: "meh, that guy was just lucky, I could've done the same myself, but I just couldn't afford to play the game". But it's also so toxic. [1] https://www.guinnessworldrecords.com/world-records/most-successful-chimpanzee-on-wall-street https://www.guinnessworldrecords.com/world-records/most-succ...

LinuxBender 4y ago
Is this in line with the concept of pitting r/wallstreetbets vs a fish? [1] The fish did pretty good in my opinion. [1] - https://www.youtube.com/watch?v=USKD3vPD6ZA https://www.youtube.com/watch?v=USKD3vPD6ZA
iancmceachern 4y ago
I dont agree. Zuckerberg is a bad example, he was truly lucky. In my 20 years doing this, my experience aligns with the original comment this post is about. It's healthcare. Unless you can afford to float your household expenses including Healthcare for a year, you can't play in the early stage startup game. It's just simple survival, some of us have to work to survive.
- credit_guy 4y ago
  I too could never afford to enter the startup game. But the conclusion that those who enter the game and succeed are simply the lucky coin flippers does not follow. Zuckerberg was not "truly lucky". He succeeded where My Space failed. And where the mighty Google failed too (do you remember Google Plus?). It's very comforting to say it's luck, but it just isn't. Also, just so I'm not accused for being a Zuck fanboy, I don't have a Facebook account, and I consider Facebook a borderline evil company, and Zuck quite slimy. But just a lucky guy he is not.
  - SlickNixon 4y ago
    I think the claim would be lucky in terms of time, not execution. Facebook appears to have all the same stagnation problems that MySpace did, with a little more time in the sun because they're entrenched in a static market. Google Plus was late to the same party. Let's also not forget that, when Plus launched in 2011, the competition between the two organizations was Google running for its dinner and Facebook running for its life.
    - credit_guy 4y ago
      > Google Plus was late to the party. That does not diminish the result of Facebook defending its turf. Google then (and now) was the 800 pound gorilla in tech. Facebook resisting the attack, and making Google run with it tail between its legs is not a small achievement.

ranit 4y ago

And the actual HN comment link: https://news.ycombinator.com/item?id=15659076 https://news.ycombinator.com/item?id=15659076