Luck is an important component of investment… mostly because there are so many brilliant investors out there!
This is an interesting perspective that essentially boils down to a few key points…
- There are a lot of really skillful investors out there
- If you aren’t one of those skilled investors you are at a disadvantage when it comes to investing
- Amongst skilled investors, there is a bit of luck that comes into play (considering the skilled investors are competing against each other)
- Unskilled investors are better to invest in an index and not touch their funds (don’t pull out and put in because that is essentially dumb money)
Interestingly, this is for the public markets and I suspect there is a direct correlation to the private markets (with the exception that there is no easy “index” fund to invest in for the unskilled investor). So what does that mean? Well it means that beyond learning to be a skilled investor, there is also something to be learned about how to be a lucky investor (how do be opportunistic, be in the right place/time, and so on). I guess the alternative is that you could get lucky over here. I think sites like this one, or even contest driven stock picking games like this one could be more profitable if you truly have no skills at picking great investments. The recent decline in the market is striking evidence of this.
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