tag:blogger.com,1999:blog-8152901575140311047.post666039547479745362..comments2024-03-28T12:49:46.624-04:00Comments on Musings on Markets: Luck versus skill: How can you tell?Aswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-8152901575140311047.post-72990305974151418022012-02-06T07:52:27.422-05:002012-02-06T07:52:27.422-05:00Also, a point that Nassim makes in his book "...Also, a point that Nassim makes in his book "Fooled by Randomness" is that the sample has increased a lot over the years. There are a lot more people in finance right now so we are bound to get a high proportion of 'winners' i.e. successful portfolio managersFaisalnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-90686722207789900052011-03-22T03:59:23.870-04:002011-03-22T03:59:23.870-04:00@TJ...i am new to this field but i feel it is simi...@TJ...i am new to this field but i feel it is similar to sports ... yes you are right that if u play everyday you will become good player of soccer..but again the sport is also a relative valuation..here one have to compete with others to be a good player.<br /> similarly in the field of investment ..the more we study..the more we analyse..the better will be the result..the better will be skill if we know where we are investing i.e. again knowing fully the specific investment.Sunil. Kushwahahttps://www.blogger.com/profile/01100040705534922931noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-42340554455037681412011-03-21T02:06:32.032-04:002011-03-21T02:06:32.032-04:00Sir, I request you to guide us in understanding th...Sir, I request you to guide us in understanding the on going Cairn Vedantha dealVIKRAMhttps://www.blogger.com/profile/08717526734376034995noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-21490268177375737562011-03-15T01:03:29.721-04:002011-03-15T01:03:29.721-04:00One issue comes to mind. In investing, one can be...One issue comes to mind. In investing, one can be be skilled and yet perform poorly (hence, labeled unskilled). For example, one might correctly determine that a stock is overvalued and short sell it. The problem is if others in the market do not believe that the stock is overvalued, correction might not occur and in fact, the stock might continue to rise, resulting in short-selling losses (noise trader risk). <br /><br />That is where in my opinion investing differs from sports. In sports, skill can be acquired. I am not much of a soccer player, but if I play soccer daily for few hours for extended period of time under guidance, I think I could be pretty good. In investing, you are subject to the vagaries of the market. Unlike sports, your success is not the result of your own skill only; it really depends on correctly figuring out the collective psychology of all investors and that is something I believe is almost impossible to figure out consistently. I think the odds are stacked against identifying skilled investors (as compared with identifying skilled sportsmen).TJhttps://www.blogger.com/profile/11832926511840649139noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-5019749804963113982011-03-14T22:02:47.911-04:002011-03-14T22:02:47.911-04:00Vikram, You have far more faith in skill winning o...Vikram, You have far more faith in skill winning out in investments than I do... And Govind, this is true in every market...Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-89621819226435206832011-03-14T20:31:49.879-04:002011-03-14T20:31:49.879-04:00The problem is we do not stick to our thought out ...The problem is we do not stick to our thought out investment philosophy or we do not have one to begin with. At least this is my observation while studying Indian market.GOVIND GADIYARhttps://www.blogger.com/profile/16979167547318466056noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-63965460883960484732011-03-14T02:39:54.518-04:002011-03-14T02:39:54.518-04:00Good article Sir. My point is in the world of Fina...Good article Sir. My point is in the world of Finance Science only people with high skills can be lucky & not the other way around.VIKRAMhttps://www.blogger.com/profile/08717526734376034995noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-5226638032744382572011-03-13T09:20:44.092-04:002011-03-13T09:20:44.092-04:00Absolutely. My disagreements with Buffett are not ...Absolutely. My disagreements with Buffett are not about his investing genius. In fact, I highlighted Buffett in my book on investment philosophies as someone who has a well thought out philosophy and has stayed true to it over the decades.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-58118852782563453462011-03-13T07:14:04.521-04:002011-03-13T07:14:04.521-04:00Warren Buffet signifies the difference between luc...Warren Buffet signifies the difference between luck and skill in the world of investment and finance...You can easily relate to all the 4 elements that differentiate between skill n luck..Prof do u agree with me??Immortalhttps://www.blogger.com/profile/02889853969712537454noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-88469078788540407652011-03-12T20:41:34.619-05:002011-03-12T20:41:34.619-05:00I would say that having worked in the industry, ma...I would say that having worked in the industry, many participants actually believe it is luck. That is why so many put so much effort into marketing. Why spend on research when it's irrelevant? Better to convince the client that you are good than be good. <br /><br />The biggest issue concerning people who want to place money at an investment firm is even if you can, without a doubt, calculate that the asset manager is skilled rather than lucky (which you can't) there's nothing to say that the makeup of the team that contributed the skill will be around tomorrow. In most cases, teams with great records dissolved as individuals were offered better jobs.C. Fuzzbanghttps://www.blogger.com/profile/01763956615872125922noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-16748282414702298772011-03-12T17:01:40.918-05:002011-03-12T17:01:40.918-05:00this one does explain a lot to me... :)this one does explain a lot to me... :)Gaurav Mehtahttps://www.blogger.com/profile/06728937525354512495noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-9649203002817835442011-03-12T15:53:52.574-05:002011-03-12T15:53:52.574-05:00Good article Aswath, the problem we face is that w...Good article Aswath, the problem we face is that we have managers who often have the skill to dress up 'luck' as one of their skills in being able to take advantage of opportunities aggressively. Risk ofcourse is an important factor and in hindsight everyone can prove they are a winner.<br /><br />Consistency, as you say is the key measure!Balajihttps://www.blogger.com/profile/10395276528346425134noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-1709496001194791002011-03-12T13:38:11.122-05:002011-03-12T13:38:11.122-05:00Very nice one professor. Simple yet precise.Very nice one professor. Simple yet precise.Mohit Rathihttps://www.blogger.com/profile/03627024893437141068noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-67951401588128118912011-03-12T13:34:31.129-05:002011-03-12T13:34:31.129-05:00The discussion starts a few minutes in ...
http:/...The discussion starts a few minutes in ...<br /><br />http://www.dimensional.com/famafrench/2010/10/future-of-money-management.htmlJohnhttps://www.blogger.com/profile/02034345955061025541noreply@blogger.com