Page 83 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

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These are not delusions or failures of responsibility. They are a smart
acknowledgement of how tails drive success. For every Amazon Prime or
Orange is The New Black you know, with certainty, that you’ll have some
duds.

Part of why this isn’t intuitive is because in most fields we only see the
finished product, not the losses incurred that led to the tail-success product.

The Chris Rock I see on TV is hilarious, flawless. The Chris Rock that
performs in dozens of small clubs each year is just OK. That is by design.

No comedic genius is smart enough to preemptively know what jokes will
land well. Every big comedian tests their material in small clubs before
using it in big venues. Rock was once asked if he missed small clubs. He
responded:

When I start a tour, it’s not like I start out in arenas. Before this last tour I
performed in this place in New Brunswick called the Stress Factory. I did
about 40 or 50 shows getting ready for the tour.

One newspaper profiled these small-club sessions. It described Rock
thumbing through pages of notes and fumbling with material. “I’m going to
have to cut some of these jokes,” he says mid-skit. The good jokes I see on
Netflix are the tails that stuck out of a universe of hundreds of attempts.

A similar thing happens in investing. It’s easy to find Warren Buffett’s net
worth, or his average annual returns. Or even his best, most notable
investments. They’re right there in the open, and they’re what people talk
about.

It’s much harder to piece together every investment he’s made over his
career. No one talks about the dud picks, the ugly businesses, the poor

acquisitions. But they’re a big part of Buffett’s story. They are the other side
of tail-driven returns.