There is plenty of discussion online about the relationship between price and value. One perspective I like is to see price as external feedback and value as intrinsic ability. This lens works for looking at a company or an organization, and for examining individuals—especially myself.
Life comes down to three kinds of circumstances: achieving more than your ability would warrant, achieving in line with your ability, and enduring a low point while patiently preparing for the future. By achievement, I mean external feedback. For an individual, that might be conventional success, such as high exam scores or a high salary; for a company, it might be its share price. Whether this feedback is “correct” is outside the scope of this piece. What matters is that the standards behind it are relatively stable. Against that relatively stable baseline, people’s lives and companies still rise and fall: “price fluctuates around value.”
The reason for these fluctuations is simple, too: “Reversal is the movement of the Dao.” Take my own experience. For a long time, I learned through pattern recognition: I solved problems to familiarize myself with their patterns, rather like the models before o1 that lacked reasoning ability. The ceiling of this approach must be quite low. Perhaps thanks to a little quick-wittedness, I did well in my high school entrance exam. That gave me an extremely strong but misguided positive signal, encouraging me to stick with this flawed way of learning for a long time. Only after encountering a great deal of negative feedback, many years later, did I realize there was a problem with how I had been learning all along.
So when we receive positive feedback far beyond our actual ability, it is easy to feel encouraged to keep doing the wrong things. As this accumulates, we will eventually find that we have hit rock bottom. The reflection that follows is then a period of gathering strength for the next ascent.
The world is far more complex than our understanding of it, and our judgments of a company’s value or our own abilities are subject to enormous subjective limitations. The delta between price and value, or between personal achievement and ability, is what I call luck. It can be positive or negative. It measures the gap between objective reality and your understanding of your own ability—or, in plain language, “good luck or bad luck.”
These days, “I was lucky back then” feels more like a reflection: a mix of thoughts and feelings about how my past achievements far exceeded my ability and understanding, and about everything that followed. Coincidentally, when people praised me back then, I would also say, as a polite response, “I was lucky.”
One lesson this experience taught me is that when I achieve something, I can be 100% certain that the achievement exceeds my ability and understanding. So while it is useful to look back on what made a success possible, it is more important to examine the causes I have overlooked, beyond the scope of my own ability. If I rely on luck, or fail to realize that my achievements exceed my capabilities, it is like the old saying: any money you make beyond the limits of your understanding will, sooner or later, be lost.
The way to counter the cycles of luck is to accept luck and turn it into growth. That includes bad luck, and even more so, good luck.