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Investing: Luck vs. Skill

By Matthew Kerkhoff

 

I read a fascinating article over the weekend that I though applied incredibly well to investing and the financial markets. The subject of the article was the paradox of skill, and its implications are rather profound.

 

Many endeavors in life are a combination of both skill and luck. Think sports for example. In baseball, a few inches can make the difference between a foul ball and a home run. A minor fluctuation in the wind as the ball flies through the air can be the difference between winning and losing a game.

 

The same could be said about golf, a sport which I highly enjoy. No one would argue that a better skilled player has a much higher likelihood of landing next to the pin, but is the difference between the player who holes out the shot and the one who lands an inch from the cup a matter of skill, ... Log in or subscribe to continue reading.


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