Last Sunday afternoon. Our son’s U17s AFL team is playing the Grand Final – the first ever for the team. And they’re the underdogs – facing the team who has been top of the ladder pretty much all season.
The two teams are well-matched. It’s the fourth and final quarter and the difference in score has only once gone beyond single-digits. There’s a minute to go, and the opposition is four points in the lead – just four points.
Fifteen seconds out. A clever pass, a swift kick, and it’s a goal. Our team did it. They won the grand final. In the last 10 seconds of the game. By two points.
Was it skill or luck that delivered the team the premiership? Maybe our team will argue that it was all skill – and the opposition, that it was pure luck!
The reality is, when you look at most activities, whether it’s sports or investing, both skill and luck are contributing.
Yet, like some sports teams, there are many investment managers out there who will claim that they are sufficiently skillful to consistently beat the market, and maybe just a few with the performance numbers to prove it.
Even with the top performing investment managers, we should still ask: are they truly skillful or did they just get lucky?