The Paradox of Skill
🔗 a linked post to
fs.blog »
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originally shared here on
The key is this idea called the paradox of skill. As people become better at an activity, the difference between the best and the average and the best and the worst becomes much narrower. As people become more skillful, luck becomes more important. That’s precisely what happens in the world of investing.
The reason that luck is so important isn’t that investing skill isn’t relevant. It’s that skill is very high and consistent. That said, over longer periods, skill has a much better chance of shining through.
In the short term you may experience good or bad luck [and that can overwhelm skill], but in the long term luck tends to even out and skill determines results.