What is 'Paradox of skill' in investing?

This refers to a phenomenon where investors’ success is determined increasingly just by random luck even if their skill levels increase over time. This is because, even as the absolute skill level of most investors increases over time, the relative difference in their skill sets tends to become narrower over the same period. So, as investors with largely similar skill sets end up competing against each other, the success of these investors becomes largely random in nature. The concept was proposed by American investor Michael J. Mauboussin in his 2012 book The Success Equation.

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Printable version | Nov 27, 2021 10:49:04 PM |

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