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Luck or Skill - Which matters the most in finance?

There are still others who attribute all ‘superior performances’ in portfolio management as the personification of luck.

May 06, 2011 5:56 IST | India Infoline News Service

Sample this: A fund manager's expertise helps double an investor's money in a year's time and a company's stock triple in six months. Was it luck or skill that aided the fund manager to get the best out of the deals? If your answer is luck, the fund manager should be entitled to a portion of both the investors' wealth profits.


Success not defined clearly:

Luck and skill stand at two extreme ends in finance. If some view any superior performance as vindication of skill, others prefer to call it just pure luck. There are still others who attribute all ‘superior performances’ in portfolio management as the personification of luck. Success is not clearly defined in finance. A portfolio manager cannot be called successful just because he makes money for his investors or a company called a good one just because it delivers more returns than the rest in its sector. Read More...

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