Capital Ideas Quotes

“Consider this set of coin-tossing possibilities, proposed by Warren Buffet. Suppose 225 million Americans all join in a coin-tossing contest in which each player bets a dollar each day on whether the toss of a coin will turn up heads or tails. Each day, the losers turn their dollars over to the winners, who then stake their winnings on the next day’s toss. The laws of chance tell us that, after ten flips on ten mornings, only 220,000 people will still be in the contest, and each will have won a little over $1,000. After that, the game heats up. Ten days later, only 215 people will still be playing, but each of them will be worth over $1,050,000. Buffet suggests that this small group of winners will marvel at their own skills. Some of them will write books on “How I Turned a Dollar into a Million in Twenty Days Working Thirty Seconds a Morning.” Or, they will tackle skeptical professors of finance with “If it can’t be done, why are there 215 of us?” But, Buffet goes on to point out, “. . . then some business school professor will probably be rude enough to bring up the fact that if 215 million orangutans had engaged in a similar exercise, the results would be much the same—215 egotistical orangutans with 20 straight winning flips.”22”
― Peter L. Bernstein, Capital Ideas: The Improbable Origins of Modern Wall Street