Just Who Gets Lucky, Anyway?

If success is often a matter of luck, can you become a luckier investor?

Eric Miller, investment strategist at Donaldson, Lufkin & Jenrette Securities in New York, recently wrote an essay on the role of luck. He recounted five major characteristics of "lucky" people, as originally described by author Max Gunther in his 1977 book "The Luck Factor." Lucky individuals, Gunther said:

* Tend to form many friendships, thereby increasing the amount and diversity of information they receive over their lifetimes.

* Honor their hunches. A hunch, as Gunther described it, is a conclusion based on facts that your mind has observed, stored and processed, but that you may not consciously know. Hunches are not hopes or wishes, however.

* Are bold. As Gunther related it, boldness means a readiness to zigzag in a new direction to seize a new opportunity. He used the example of oil magnate J. Paul Getty, who "was bold but not rash," Miller writes. "Getty said you must be willing to live with the element of chance, because if you insist on certainty, you will paralyze yourself."

* Limit their losses. That means admitting mistakes and discarding bad luck before it becomes worse, Miller says. Getty, he writes, "never risked a loss that was big enough to cause him serious hardship." Gunther quoted a successful Swiss banker who put it this way: "If you are losing a tug-of-war with a tiger, give him the rope before he gets to your arm. You can always buy a new rope."

* Are prepared for problems. "Gunther commented that there is a misperception that lucky people are always optimistic," Miller writes. "The actuality is that they tend to be people always prepared for the worst . . . prudent people who recognize that fortune is fickle. They're also the ones in the investment world who would never make the mistake of 'confusing genius with a bull market.' "

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