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It’s a bit scary how far over towards the luck end of he spectrum that Michael Mauboussin positions investment decision making. He has written extensively on this subject and is a true believer in that judgment. He is not alone.
Nassim Nicholas Taleb also has arrived at that same assessment. He writes as follows:
“So maybe we should just stop picking stock pickers. If the performance of the hottest managers reverts to the mean in the long run, doesn’t it make sense to simply buy the mean – that is, to give up entirely on the notion of stock-picking genius and buy the whole market with an index fund? It does, but a lot of us find it hard not to gamble by putting at least some of our money into the hands of fund managers who seem to have made a lot of smart picks. We all want to believe that we have an edge, if not in picking stocks than at least in picking those who will pick our stocks — even if in our heart we know it’s all an illusion.” Here is a Link to the article that I extracted the quote from:
Given the high educational, experience level, and commitment from professional stock pickers, it is indeed a tough world with very few market Index beaters.
Comments
It’s a bit scary how far over towards the luck end of he spectrum that Michael Mauboussin positions investment decision making. He has written extensively on this subject and is a true believer in that judgment. He is not alone.
Nassim Nicholas Taleb also has arrived at that same assessment. He writes as follows:
“So maybe we should just stop picking stock pickers. If the performance of the hottest managers reverts to the mean in the long run, doesn’t it make sense to simply buy the mean – that is, to give up entirely on the notion of stock-picking genius and buy the whole market with an index fund?
It does, but a lot of us find it hard not to gamble by putting at least some of our money into the hands of fund managers who seem to have made a lot of smart picks. We all want to believe that we have an edge, if not in picking stocks than at least in picking those who will pick our stocks — even if in our heart we know it’s all an illusion.”
Here is a Link to the article that I extracted the quote from:
http://business.time.com/2012/08/17/nassim-taleb-in-the-investment-biz-luck-trumps-skill-so-take-your-talent-elsewhere/
Given the high educational, experience level, and commitment from professional stock pickers, it is indeed a tough world with very few market Index beaters.
Thanks for the reference and Best Wishes.