NdukuOutLoud

On Tail Ends and Staying in the Game.

So, I finally picked up a copy of The Psychology of Money from my bookshelf where it has been sitting for almost a year now. This is because one of my unpretentious goals this year is to read the books I already own before buying new ones. So far, so good.

And maybe because it was finally time. They say that at the right time, whatever word that is meant for you will get to you.

A few chapters in, I get what the fuss is about. Most financial books make investing look scary and out of this world. For me, at least. But Morgan Housel brings a deeply human feel to it.

Take chapter six, for instance. The title (which I have shamelessly used as mine, too) is striking: ‘Tails, You Lose.’

My first thought went straight to flipping a coin—heads or tails. And it could be, because with most of life and decision making, as informed as we might be. As ‘right’ as the choice might be at the time, we’re really just flipping a coin and hoping that we win. But I must admit, that it turns out much better than this. It’s about tail events.

In statistics, a normal distribution is that bell curve we used to draw to illustrate that values cluster symmetrically around the mean. But most us pay little to no attention to the extreme ends of that curve —the tails. I, for instance, have drawn this curve more than I count. But it was mostly always about getting the curve right. Not about the tails.

On the contrary, Morgan’s focus in this chapter is leaning more on the tails and maybe even a little more on the right tail—the extreme, rare financial or statistical occurrences that sit way out on the edge. In finance, it’s the massive outlier investments or rare strokes of luck where almost all the returns live. Which is okay, really. Because it’s the good stuff. The destination. The returns after years of investing. The big break after several failed attempts. The one stock that pulls through when the rest do not.

It’s a brilliant point, but as I read it, I couldn’t help thinking about the other side.

The Left Tail: The Messy Beginning

There really isn’t one without the other. But more often than not, we do not get to enjoy the magic of the tail end. We quit before we get there. It’s the messy beginning—the heavy mistakes, the clumsy first steps, the terrible early drafts, and the steep stumbles of starting a new thing. It’s the side we are terrified of. We want to skip straight to the right tail without ever having to sit in the left one.

But we rarely acknowledge that you have to live in the left tail to ever reach the right one. And the mistakes aren’t a detour from the path; they are the path.

Failure and Success

The book uses examples from venture capitalists and big businesses like Disney and Amazon. I personally, never thought to look into either’s past failures. They are a massive hit now and that is what matters. And I know it’s not just me. We tend to focus exclusively on their massive successes, forgetting that they also had colossal failures. Not but—and.

The failures and the successes exist alongside each other, together.

Like most of us, I have a tendency to freeze at the first sign of failure in that left tail, sometimes stopping altogether. But what if those aren’t failures at all? What if they are just wrong turns, or good decisions we simply didn’t wait out long enough?

The Art of Staying Power

Sticking around is not just a finance strategy. It’s a life rule.

Whether it’s a skill, or a hobby, or a relationship, the only way to get to the good stuff is to stay in the room. We need to give ourselves room to make mistakes and acknowledge that some of the chaotic stuff along the way might be out of our control.

But stick around long enough, and you get to the good part.

We know this already. We look at “new” artists who suddenly become overnight sensations, forgetting they’ve been singing to empty rooms for a decade. We crown “new” authors who finally hit the bestseller list, ignoring the drawer full of bad manuscripts that came before it.

We’ve got to be okay with being bad at the things we love.

They will probably be clumsy and awkward before they get great. But we have to stick around long enough to cross the curve.

Write the bad article. Sing the bad song. Just do it. Badly.

It gets good.