The Difference Between Skill and Luck

Basketball comes closest to chess in terms of being the game with the most skill involved. In comparison, hockey looks more like the lottery (and don’t even ask about trading). 

The bottom line is that the law of smaller numbers allows for more variance in individual player and game outcomes in a sport like baseball or hockey – in baseball the most skilled hitter only gets up to bat a few times per game and in hockey the star players aren’t on the ice much more than a period or two out of three. Less plate appearances or ice time can mean that it is more likely that a fluke of some sort, good or bad luck, can make an impact.  This is in contrast to basketball where there are only five players at any time and the stars typically play most of the game – more playing time means a bigger sample, by extension this means less variance.

Golf/Trading Quotes

Yesterday night I was reading huge list of quotes about golf. After reading them I realized that if you substituted the word trading for every time the word golf appears in these quotes, that the same statements would hold true.

  • Golf [Trading] is about how well you accept, respond to, and score with your misses much more so than it is a game of your perfect shots.” – Dr. Bob Rotella

  • “One of the most fascinating things about golf [trading] is how it reflects the cycle of life. No matter what you shoot – the next day you have to go back to the first tee and begin all over again and make yourself into something.” – Peter Jacobsen

  • “No-one will ever have golf [trading] under his thumb. No round ever will be so good it could not have been better. Perhaps this is why golf [trading] is the greatest of games.” – Bobby Jones

  • “Golf [Trading] is the closest game to the game we call life. You get bad breaks from good shots; you get good breaks from bad shots – but you have to play the ball where it lies.” – Bobby Jones

  • “Golf [Trading] is not a game of great shots. It’s a game of most accurate misses. The people who win make the smallest mistakes.” – Gene Littler

  • “Golf [Trading] is deceptively simple and endlessly complicated.” – Arnold Palmer

  • “The fundamental problem with golf [trading] is that every so often, no matter how lacking you may be in the essential virtues required of a steady player, the odds are that one day you will hit the ball straight, hard, and out of sight. This is the essential frustration of this excruciating sport. For when you’ve done it once, you make the fundamental error of asking yourself why you can’t do this all the time. The answer to this question is simple: the first time was a fluke.” – Colin Bowles

  • “Golf [Trading] is a difficult game, but it’s a little easier if you trust your instincts. It’s too hard a game to try to play like someone else.” – Nancy Lopez

  • “Golf [Trading] is 20 percent talent and 80 percent management.” – Ben Hogan (more…)

Portuguese Bank Borrowings From ECB More Than Double In May, Hit All Time Record of €35.8 Billion

Alas, the deteriorating funding environment in Portugal is not a fluke – according to the Bank of Portugal, bank borrowings from the ECB surged in the past month, and doubled from €17.7 billion to €35.8 billion in May. As Steven Major from HSBC said, quoted by the FT: “These yields are approaching that magic number of 5 per cent that is likely to be charged by the European stability fund. If the yields keep going up at this rate, then they will be paying much more than 5 per cent next month, which is arguably unsustainable.” And confirming the non rose-colored glasses reality was another banker who said: “These yields are not sustainable. Portugal will have to access the emergency stability fund if they continue to rise at this rate.” Elsewhere, Greece continue to be bankrupt.

The chart below shows total borrowings from the ECB by Portuguese banks…

Go to top