By Ubukombe Hallellua Pacifique  CONTRIBUTOR (Opinions expressed by YOH contributors are their own.)

For those who usually ask me why I majored in applied mathematics, I just explain to you below applied mathematics in real life and business realties.

It’s ironic that the secret to winning is learning how to put up with losing.

This is a great analogy for most business and investing endeavours.

A system that gives you a 55%, or 65% chance of success is phenomenal, but it still means you’ll spend close to half your life getting beat up.

Since 100% odds of success are either not lucrative, illegal, or ephemeral, the ability to survive losing is a prerequisite to any shot at eventually winning.

The business world is a continuous chain of disappointments – recessions, bear markets, brutal competition, employees quitting, supply chain breakdowns, whatever – so every chance at success has to be framed as a net reward down the road amid a constant state of battle and hassle.

Two things come from viewing success as the ability to absorb loss:

1. IT IS EASIER TO BE AN OPTIMIST. Optimism is usually defined as a belief that things will go well. But it’s not. It’s a belief that the odds are in your favor, and over time things will balance out to a favorable outcome even if what happens in between is filled with misery.

I’m optimistic about the economy because the odds of success are in its favor. But I still expect a chain of recessions, panics, pullbacks, and upheavals. Same for businesses. There are companies whose future I am extremely optimistic about but whose quarterly investor updates I expect to be peppered with setbacks. The two are not mutually exclusive.

2. YOU VALUE THE MARGIN OF SAFETY. Many bets fail not because they were wrong, but because they were mostly right in a situation that required things to be exactly right.

Room for error – often called the margin of safety – is one of the most under-appreciated forces in business.

It comes in many forms: A frugal budget, flexible thinking, and a loose timeline – anything that lets you live happily with a range of outcomes. It’s different from being conservative. Conservatives are avoiding a certain level of risk.

Margin of safety is raising the odds of success at a given level of risk by increasing your chances of survival. Its magic is that the higher your margin of safety, the smaller your edge needs to be to have a favorable outcome. And small edges are where big payoffs tend to live since most people don’t have the patience to wait around for them.

The point is that short-term loss is usually the cost of admission of long-term gain. It’s a price worth paying but takes time for the product to be delivered.

What is your take on this?

UBUKOMBE HALLELLUA PACIFIQUE is a Voracious Reader, Entrepreneur/Investor, Business Scientist, Writer, Renaissance Speaker & Student of Life. He can be contacted at the following email:

Ubukombe hail from Kigali, Rwanda

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