Luck vs. Skill
Comments posted to “The Role of Luck and Skill in Investing,” an interview with Michael Mauboussin, in the September 2013 AAII Journal.
I’ve struggled with how much of the returns in my system are “luck” and how much are “skill.” Only the most egocentric would assign a lot of skill, and those folks are riding for a fall.
That said, I chair a group system, called TtP-S, which deals with very high quality dividend-paying stocks in a blended investing and trading model. It follows a set of tight rules. I found myself assessing the relevance of Mr. Mauboussin’s theories as compared to our own investing system, and lots of spotlights (and a few alarm bells) went on. Also, we cover a bunch of his principles pretty well too.
...To continue reading this article you must be an AAII member.