Is grit the true secret of success? no

Kinda old but still interesting Is grit the true secret of success? What does it take to do really well in life?

The answer is an emphatic ‘no’ and anyone who believes it is, is deluding his or her self. It’s no different than feel-good nonsense espoused by Gladwell books, particularly his 2008 book, Outliers.

Success boils down to luck–being at the ‘right place, right time’, and IQ and talent (winning the genetic lottery, as it’s called). The only way girt could make a difference would be if everyone were otherwise perfectly equal, but obviously that is false. Some are smarter and more talented than others. These people have a huge advantage. Some have better connections and or come from a wealthier family…another advantage (but not as big as talent). To get an idea of how important luck is, someone who bought Bitcoin in 2010 and merely held it, would be the greatest investor ever in terms of returns, far exceeding even Warren Buffett in terms of percentage returns.

Studies show that math talent manifests very early in life, long before parental intervention and ‘10,000 hours’ of practice can make a big difference. Success and skills compound, meaning that someone who has a 10% advantage starting the age of 2, by the age of 22 will be 570% better than someone else of the same age who lacks such talents. That’s why talented and gifted kids, even at a very young age, are sooo much further ahead than their peers, long before 10,000 hours of practice even becomes a consideration. So if the untalented 22-year old decides to start putting in his 10,000 hours, he’s already at a huge disadvantage. But also, the compounding boost works at any starting age. If two people decide at the age of 15 to become chess masters, the person who has a 10% compounded annual boost due to talent, all else being equal, will be nearly 6x better, after 2 decades, than his untalented peer. Because chess rankings are logarithmic (a 2500 being 10x better and rarer than 2200 or so), that makes the difference between a good player and master.

This is obvious to anyone who has either attended school (everyone) or works with children: there are the ‘slow kids’ and the ‘smart kids’, and these differences in intellect manifest very early in life, long before 10,000 hours can ever kick in. Teachers can reality identifying which students will succeed at life (or at least have the most potential to succeed) and who are slated for an ennobling career flipping burgers or greeting strangers at Walmart.

To give an anecdotal example, my middle school had a yearly writing content, and the winners obviously had more talent than everyone else (as was obvious when they read their stories aloud during the awards), and since we were only 11-13 years old it’s not like any of us had thousands of hours of practice under our belts.

I’ll use myself as an example. The first stock I ever picked, Priceline in 2003, is up over 10,000% since then. I chose it because I had read about the dotcom bubble (which had just burst) and I thought Priceline was oversold and that it’s business was still viable. Other tiny dotcom stocks (such as the globe.com) has already posted large gains since the October 2002 nadir of the dotcom bubble, and I figured Priceline would be next to pop. In 2004 I invested in a tiny dotcom stock but later learned that most of its revenues came from Yahoo, and seeing that it was vulnerable to losing this partnership, I sold. A week later (I kid you not) it lost the partnership and the stock fell 50% and never recovered. However, I don’t think investing is that highly g-loaded and most people can get the knack of it given some practice, or even by doing nothing. Just putting your money in an S&P 500 tracking fund and not selling, which is completely effortless to do and hence why it’s called passive investing, will make you better than 90-95% of fund managers. Putting it in QQQ (a Nasdaq 100 ETF), will make you better than 97% of them. And then combining QQQ with a bond fund (my favorite is LQD (a 7-year duration investment grade corporate bond fund) 50-50 allocation), will make you better than 99% of them.

Mastery at writing, golf, or chess, however, is impervious to grit and dominated by talent. The failure of the ‘Dan plan’ is evidence of this. Becoming a master investor is as simple as knowing that capital seeks (or in philosophical terms, the telos) to maximize its risk-adjusted returns. Becoming a master writer requires that one’s writing resonates with its intended audience. That is a lot harder because there is a high degree of subtlety and subjectivity as to what makes writing good. Just as there is a lot of subtlety to moving one’s body in such a manner as to make a golf ball go in a hole in as few swings as possible. Success at chess or math requires a strong working memory, which is correlated with IQ. Either ‘get it’ or you don’t.

But a counterargument is, isn’t being good ‘good enough’? And the answer is, no (at least in terms of acclaim). As the article about Dan McLaughlin shows, although he became a top 5% golfer, which is good, that is nowhere good enough to join the PGA. In terms of g-loaded activities, the good news is someone with an IQ of 120 can probably do 99% as well as someone with an IQ of 140, but the bad news is the 1% makes the difference between world-class success that results in recognition, versus being good but not good enough to actually attain such material success.