“Buy-and-hold can be much more successful. No market timing really needed.”
That’s not the point. Passive investing might make you the millionaire next door, it isn’t going to put you in the 0.1% bracket. Having a good sense of the market is knowing when an entrepreneurial concept has a good chance of working out.
I do agree that to be really super rich, luck plays a part because I could have made 10 times if certain thing had gone my way. A super rich friend once told me Bill Gates of the world will probably do well anywhere, any time; but there was a big luck factor that catapulted him to a super rich status.
The older I get and the more I see plus learn about our human brains the more I realize birth lottery determines at least 99% of who one becomes.
Birth lottery is not simply parents and country one is born in. It’s all that and more. It’s the genetics that make one driven vs passive in the same way two puppies in the same litter can have two totally different personalities - one making a great service dog and the other not.
There are simply things other humans can’t teach. There are inborn talents that no amount of “work” and effort can create.
Then there’s the opportunity one gets from their parents and place of birth. The same super talented youth who is born into today’s slums of India or Haiti simply won’t get as far as the moderate opportunities of middle class First World.
Learning more about real life has given me far more empathy for others. It makes me want to help others succeed to their level of ability. It can come in the form of college assistance. It can come in the form of a great tip for a maid at a hotel or a server at a low price restaurant. I don’t feel the maid or the server is less worthy than someone making a higher income. I’m not fond of handouts without cause, but I’m definitely in favor of helping others even if their level of “top” can never be Elon Musk.
I just remembered a situation that a former co-worker of mine went through.
His son hit it big (really big) when the tech bubble was expanding. He took a risk with a startup and was given a ton of stock. The gamble paid off and the stock went through the roof. The son was rich, knew he was rich, felt rich, and lived like he was rich. Private jets, multi million dollar house, cars, etc. He had made it but it was all on paper. He still held the stock and used that to leverage the lifestyle and then the bubble popped and his stock was worthless and he was bankrupt.
He had to get rid of everything and was penniless. His dad bailed him out and bought the house for less than 50% of what the son had paid for it just to give the kid some money to start rebuilding.
I’m sure the son is back on his feet and probably “rich” again but I’m quite certain he will never again “feel rich” regardless of what is net worth is because he not just saw that it can all go away he lived it.
There are also many, many people who chose to do jobs which are indespensible to society but don’t pay the kind of money that readily turns into wealth. Teachers, nurses, police officers etc. are not lazy, unintelligent, or unlucky.
Yes, I mentioned that very thing in my post (absent specific careers).
Also, I am a nurse, so I’m certainly aware that being a good one requires a strong work ethic. At least for 12 hours a day. 
@Creekland Good post. I also feel empathy for the humanity as I grow older. But even with different luck of draws, I feel in USA, you can live a decent life in US if you have some discipline and you don’t get into drugs, alcohol, greed or other addictions.
“The older I get and the more I see plus learn about our human brains the more I realize birth lottery determines at least 99% of who one becomes.”
One hundred percent agree. I believe that all of the following are “inborn”: whether or not: learning is easy or you are drawn to hard work or to delaying gratification or are willing to overcome ones challenges, or able to “ read” people well. These things plus when ,where and who you were born to determine whether one is likely to succeed.
I remember when my 4 year old daughter sat for hours to complete a task. Even though I told her she could do it later, another day etc… No. The preschool teacher had assigned them the task of making a valentine for each student giving them two weeks to complete the task. But she wouldn’t hear of watching tv or playing til she was done. It was then I realized the the capacity for hard work just came naturally to some people. It was “in her”.
The harder I work, the luckier I get.
@bluebayou - I think you quoted my line (my post 683) about having a good sense of the market (your post 696). I think we are referring to 2 different “markets”. In this situation, I was referring to what would sell (“that” market - the commercial one) as opposed to the stock market. Some very great idea that could have made someone lots of $$ were ill timed, for any of a variety of reasons, in the commercial market, and didn’t succeed. Then there are the ridiculous fads that do succeed, though typically with a short shelf life (beanie babies, pet rocks, wall mounted singing fish, etc).
Delaying gratification may be affected by environmental factors. Specifically, growing up in an environment of poverty and scarcity may train someone to take what is offered immediately, because it may not be there later, rather than delaying gratification for it to become better later. I.e. why save for tomorrow when it is uncertain whether there will be a tomorrow (because you may starve to death if you do not eat what you see now)?
https://www.theatlantic.com/family/archive/2018/06/marshmallow-test/561779/
On the other hand, some (not all) people who grew up in poverty or scarcity may become extremely frugal in their personal finances even if they become non-poor later – think of the stories about “grandma who grew up in the Depression and will not spend on any luxuries even though she is a multimillionaire next door”.
" Teachers, nurses, police officers etc. are not lazy, unintelligent, or unlucky."
It’s unfortunate that our society often defines “success” in very narrow, monetary terms. I see it here on CC a lot.
I am a near 1 percenter instead of “just “ a top 5 percenter because my aunt was, among other things, frugal to an extreme…in a bad way I’d describe as miserly. People try to explain it “Oh she grew up in the Depression”. But her parents were a dr to the wealthy and a school teacher who were part of the very small upper middle class. They had and appropriately spent money even during the most difficult times for most. . Her sister did not turn out like this.
Some people are born this way. Sometimes in a good way. Sometimes not. She was a not. It’s why I feel the need to give large amounts to charity and leave large tips for waitstaff whom she never left more than 5 percent. When we were with her and she felt obligated to pay, I could slip back and put more Money on the table. But for all those times I couldn’t I feel the need to at least pay it out to someone.
It is hard to understand why people have such different attitudes toward money. I and all my sibs are in the top 5-20-% of income. I have no idea about most of their net worth but suspect some have done a lot better job of saving / investing vs spending than others. All of us live on Oahu, which is one of the highest COLs in the US.
We all have different priorities and have chosen to spend our money differently. I think we all feel differently about how rich/poor we are. It really doesn’t seem to matter how much income each household brought in (for example I believe our household often had the lowest gross income) as to whether the person felt “rich” or “poor.” My sib whose household is likely highest gross income and net worth is one of the most frugal.
This thread has made me ponder all of this anew.
Interesting thread, I think about this a lot, even though I’m not 1%.
My gut wants to believe I somehow deserve what I have, but my head knows it is mainly luck.
Sometimes art, rather than science, helps to clarify my thinking.
From the most heartbreaking piece of TV that I’ve seen, the penultimate episode of The Wire, quoting the movie Unforgiven:
“Deserve got nothing to do with it”
I believe luck is a huge part of it but I also believe hard work helps us be able to make the most of the luck that comes our way and take calculated risks.
Being born in the US, at this time, with the range of opportunities we have had was extreme good fortune that I can’t take credit for having created.
We have made choices on how to spend / save / invest our assets in ways that have worked out well for us—partly luck, partly hard work.
We have had chronic health challenges but because we have had excellent medical insurance as employee benefit, have gotten great medical care. This has affected our family’s income and assets as well.
Don’t think anyone on this thread has mentioned “deserve”.
However, as one person’s anecdotal evidence, everyone I’ve known who has been well off have definitely “made it happen”. The money didn’t just fall upon them, they took steps to do it themselves.
It’s vocal on here a lot, and definitely in society, but it’s not all of us (on here or in life).
One of my most memorable encounters came from talking with a gentleman at our church. When the typical small talk included the question, “What do you do?” he answered with, “I don’t like to tell people up front because then folks start instantly judging each other. I don’t think that’s right.”
It made for some interesting food for thought.
And yes, I know (at this point) what he does. He’s a high executive in a bank - making a fair bit of money - a good bit of which goes to charity.
This encounter happened years ago - when my lads were still young. It’s totally changed how I think about people as I meet them even when that typical conversation starter comes up. I let other things rank higher in my judgment.
There are definitely way too many people who worship - or despise - the rich. Personally, I just like being content. I still feel it’s the secret to less stress and general happiness. Contentment is easier when the bills are paid and there’s an emergency fund - no doubt - but it doesn’t require an endless quest for more.
And this too is birth lottery. The kids at my high school haven’t decided for themselves whether to grow up in a house with an empty fridge or a full one.
We often call this “grit” and plenty of very intelligent people have tried to figure out how to instill it in youngsters so they can overcome all sorts of issues they’ve been dealt. So far, I haven’t seen anything that is proven to work - or even showing a great correlation. It’s part of why I’ve changed my thinking from “everyone can do it” to “birth lottery - this time genetics inherited - means so much.”
One can teach something of a work ethic. Most kids will do their homework for incentives like grades or praise. But one can also teach football. Most kids can learn those basics. One can’t teach everyone to become a game winning quarterback no matter how many hours they all put in. The kid with natural talent will be able to do so much more, often even with fewer hours. Then there are the kids who are physically handicapped and can’t actually play even if taught (think blindness or paralysis). There are those who can’t even get to the game. Same goes with academics and pretty much everything else. All birth lottery.
Laziness shouldn’t be rewarded. Not all kids should get an A regardless of effort. But sometimes a C is the best one can do and it doesn’t make them less of a person or less deserving of a decent life.
People can work hard and save, but still not become well off. Luck isn’t synonymous with hard work, and not all luck is good.
A person who becomes disabled isn’t going to be able to build the same sort of wealth on a disability check as they would from a regular paycheck no matter how hard they work. A woman who gets the short end of the financial stick in a divorce is going to have a difficult time building a nest egg, especially if she’s been a SAHM or there are minor children. Parents whose spouse dies young may find it a challenge to save for both college and retirement. An unexpected expense can put low income people behind and a string of them are difficult to overcome.
I’ve known too many people in all of these situations, and worse, to believe that the wealth we’ve built is through our hard work alone. We’ve had plenty of luck. Fortunately, for us, all of it has been good.