How much of a role does luck play in investing in the stock market?

Do you believe in luck? Do you believe you need luck to be successful in the stock market? In my infant trading 212 portfolio that I share on YouTube, one of my investments rose by nearly 100% in a single day, and another is down over 95%.

In this article I want to talk about whether of not you need to be lucky in order to be successful when investing in the stock market.

When it all goes wrong!

Lets start with the bad news! My investment in Luckin Coffee, the hot up and coming coffee company in China is is currently at a portfolio smashing 95% in the red… so what happened there? Let’s take a quick look at the last few months.

I bought 4 shares at a cost of around £93 in January 2020 after rumour of impropriety caused this rising stock to take a quite dramatic dip. An anonymous source questioned the coffee chain’s financials and after a fairly robust denial of any wrong-doing I was happy to invest. Initially the stock rose again investors seemed satisfied with the outcome. I was sitting on a reasonable paper profit at this point.

Then on 2nd April an internal investigation which resulted in the CEObeing fired for fabricating sales figures. The price duly plummeted 81% in a day. Trading was suspended on the Nasdaq while investigations carried on.

Trading resumed 6 weeks later and it wasn’t good for Luckin – the share price dropping from $4.39 on reopening to $1.42 at the time of writing… an ass-clenching 95% drop for me.


I could argue that this was unfortunate. You don’t expect such an ambitious company with grand designs of pushing Starbucks aside in China, with such huge investor backing to go and do something so plainly stupid. However, you could argue that I was asking for trouble for getting involved in a company with outstanding bad press, outrageous debt brought about by such agressive expansion, and being on the far side of the world with limited transparency… what do you think? Ironically, as a result of a kind person using my Trading 212 referral link I got a free Startbuck share, worth $77 at the time of writing, so that could be considered lucky. Or justice depending on how you look at it!

The good news

At the opposite end of the luck spectrum, I watch my Marston’s shares rise 98% in a a single day. I saw the meteoric rise happen right in front of my eyes as on Friday afternoon and I had no idea why it was happening. I desperately tried to find out what was going on, but it would be Saturday morning before I discovered that a £780M merger with the Carlsberg’s UK arm, was the cause of the spike.

Now, this was not a master-stroke by me, obviously. I bought Marston’s at a discounted price from their all time high, hoping to gain from an eventual recovery in the hospitality sector in the UK. I wasn’t expecting anything like this merger to happen, but my holding in Marston’s has now gained 138% at the time of writing.

Was I lucky? You could say I’ve been very lucky. Or you could argue that it was a good choice, justly rewarded, as Marston’s is a much loved UK company, with good management, a trusted brand, with some risk in the purchase priced in, but with appropriate reward potential. Having seen the reward come through at this point, you could argue, the risk paid off. Is it lucky that after considering selling my stock only a few days ago that I decided against?

Luck or fine judgement?

I have a fairly relaxed approach to the life and times of stocks and shares. I think it goes to show that while a single stock can be vulnerable to short terms highs and lows (or total capitulation!) keeping a well diversified portfolio can help even out the ups and downs, and as a result hopefully make good returns on a long term basis.

These two stocks have taught me that it probably suits me better to buy into global companies and household names, with low debt and strong histories. I don’t mind giving up a few percentage points in terms of returns if it helps to firm up the likelihood that I will see returns at all.

If you are interested in talking more about personal finance, savings and investments and generally trying to create yourself a better financial life then please consider subscribing to my YouTube channel.

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