Ha, I skimmed some of the pages on Amazon “Look Inside” and agree that this is a pitiful piece of literature. It’s obvious (to me, anyway) that the reviewers are probably all cronies of the author (maybe family members or relatives) and basically stuffed the ballot box. The content in this book is so bad, it’s laughable.
For sure. You wouldn’t be the first person in finance to put something that already exists, with no modifications, in different packaging and charge for the packaging. It’s like selling bottled tap water.
he said the last 7 years, so including 2008. I guess he shorted? but he said he is a long term investor. He seems to know a bit about the stock market but I am wondering can you really kick Mr Martket’s ass like that? I mean with diversification and everything its very unlikely? Anyone here make a 20% return in the last 7 years?
There was an interesting take on this skill v luck topic in an article from the Conference Proceedings Quarterly from September 2013. If you’re curious, the article was titled “The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing,” by Michael Mauboussin, head of global financial strategies at Credit Suisse.
Here’s the part I found most interesting:
"Skill is defined as the ability to use one’s knowledge effectively and readily in the execution of performance. So, someone knows how to do something and then can turn it on when he or she needs to. Luck is more difficult to define, although luck is in place when three conditions are satisfied: (1) It operates for an individual or a group; (2) it can be good or bad, not necessarily symmetrical; and then finally and importantly, (3) it is reasonable to expect a different outcome could have occurred.
If something different reasonably could have occurred, then luck is at work. The challenge is to figure out where we are on the luck–skill continuum. There is an elegant test to know whether there is any skill in an activity: If an activity can be lost onpurpose, then there is some skill in that activity.
For example, suppose that on 1 January 2013, two 50-stock portfolios are constructed. One is expected to do better than the S&P 500 Index and one is expected to do much worse than the S&P 500. When tabulated one year later, I would bet that the “bad” portfolio in aggregate will do roughly as well as the “good” portfolio. Investing is particularly interesting because it is not only hard to win on purpose, but it is also actually hard to lose on purpose. The conclusion is that investing is more toward the luck side of the continuum."
I always liked Mauboussin’s test for luck. If there is skill, it should be possible to be able to lose on purpose (though I’d add that this assumes the person playing against you isn’t also trying to lose on purpose).
The dart surface should be composed of stocks whose representation on the board is an area proportional to their market capitalization. Otherwise we are comparing the return of a market-weight index like the S&P 500 to some equal-weight index created by the monkeys - apples and oranges. The ability of the monkeys to outperform is not due to random stock selection, but by design.