• Letters to the Editor
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    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.

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    Discussion

    Vaidy Bala from AB posted over 3 years ago:

    Sill vs luck
    From history I learn both from Bill Gates and Warren Buffett that luck and appropriate time were in place, not much skill. L.Pasteur stated luck favours a prepared mind. Although we place excessive stress on skill development, it is only marginally leads to profit as investing. Luck may be explained as a mysterious force either good or bad strikes us completely urn fathomable. We can even say some divine force not accountable to skills department. So, we are left with the doubt how do we develop luck, is it possible at all. Skills, we do and we can. Einstein also seems to have a prepared mind favoured by luck, as no one figured out he had skills.
    Shared to generate more lively discussions from learned members.


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